A lawsuit recently filed by Scenic America strikes at a guidance issued by the Federal Highway Administration (FHWA) in 2007 related to the use of changeable electronic variable message signs (CEVMS) also known as digital billboards.  These CEVMS, which are seen with increasing frequency on sites adjacent to and intended to be viewed from the highway right of way, rely on state of the art digital technology to provide changeable, high definition commercial messages to the traveling public.

The FHWA guidance being challenged addresses an issue raised by the Highway Beautification Act (HBA), the federal law that regulates billboards outside the boundary of the right of way and within 660 feet of the edge of the right of way.  The HBA is implemented by state Departments of Transportation by negotiation of Federal State Agreements (FSAs) between the state DOT and the FHWA.  Those FSAs customarily contain restrictions regarding size, lighting and spacing of billboards. In respect to lighting the standard provision prohibits signs that have “intermittent, flashing or moving” lights. In the pre-digital era, compliance was fairly straightforward, but with the advent of LED/LCD signs, the restriction became problematic.

The FHWA responded in 1996 by adopting a “guidance” in the form of a memorandum issued by the agency, advising that FHWA’s view was that digital signs were “acceptable” so long as they were determined by the state DOT to be consistent with its FSA.  State DOT responses to the 1996 guidance varied and in 2007 the FHWA issued a new guidance, effectively concluding that CEVMS that met the State DOT’s requirements expressly did not violate the “intermittent, flashing or moving” lights prohibition in the FSA.  The guidance resulted in a significant increase in the number of digital signs allowed to be operated, to the point that digital signs have become an issue of controversy.

In its complaint, Scenic America asserts that the guidance was an illegal rulemaking, since the FHWA did not follow its own Administrative Procedures Act procedures for the implementation of agency regulations.  FHWA and the Outdoor Advertising Association of America, which intervened in the suit, have filed a motion to dismiss the suit, arguing that APA procedures were not followed because the guidance was merely that and not a formal rule or regulation of the agency.

The stakes are high since the outdoor advertising industry is inexorably moving in the direction of electronic signs.  The motion to dismiss has been briefed by the parties and is awaiting oral argument.  The case is Scenic America, Inc, Plaintiff,. v. United States Department of Transportation, Ray LaHood, Federal Highway Administration and Victor Mendez, Defendants, and Outdoor Advertising Association of America, Inc., Intervenor-Defendant, United States District Court for the District of Columbia, Civil Action No 13-cv-0093.