No. 03-14-00375-CV



# In the Court of Appeals for the Third Judicial District Austin, Texas

A US P RO E NTERPRISES , LP,

Appellant , v. T EXAS D EPARTMENT OF T RANSPORTATION , Appellee

. On Appeal from the 345th Judicial District Court of Travis County, Texas

A PPELLEE ’ S M OTION FOR R EHEARING

K EN P AXTON Attorney General of Texas J EFFREY C. M ATEER First Assistant Attorney General S COTT A. K ELLER Solicitor General M ATTHEW H. F REDERICK Deputy Solicitor General State Bar No. 24040931 O FFICE OF THE A TTORNEY G ENERAL P.O. Box 12548 (MC 059) Austin, Texas 78711-2548 Tel.: (512) 936-6407 Fax: (512) 474-2697 matthew.frederick @texasattorneygeneral.gov C OUNSEL FOR A PPELLEE ACCEPTED 03-14-00375-CV 12936746 THIRD COURT OF APPEALS

AUSTIN, TEXAS 9/27/2016 6:07:11 PM JEFFREY D. KYLE

CLERKii T ABLE OF C ONTENTS Table Of Authorities ..............................

.................................................. iii I. This Case Does Not Implicate Commercial Speech, and Neither Does Reed

. ................................................. ................. 3 A. Commercial Speech Does Not Raise the Same Constitutional Concerns as AusPro’s Political Speech. ........................................... ................................. 3 B. Reed Does Not Subject Regulations of Commercial Speech to Strict Scrutiny. ........................ ...................... 5 C. AusPro’s Challenge to the Act Does Not Extend to Regulation of Commercial Speech. .................. ............ 11 II. Severability Principles Require the Court to Preser ve the Act as It Applies to Commercial Speech. ....... ................ 13 A. The Texas Legislature Intended to Regulate Commercial Speech. ................................ ..................... 14 B. The Act Can Be Executed in a Manner that Complies with Federal Law and Avoids the Potential Loss of More than $300 Million in Federal Highway Funds. ............................ ................. 16 Prayer ............................................

................................................... ....... 19 Certificate of Service ............................

................................................... 21 Certificate of Compliance ......................... ............................................... 21iii T ABLE O F A UTHORITIES Page(s) Cases Agostini v. Felton , 521 U.S. 203 (1997) ............................... .............................................. 19 Ayotte v. Planned Parenthood of N. New England , 546 U.S. 320 (2006) ............................... .............................................. 17 Bates v. State Bar of Arizona , 433 U.S. 350 (1977) ............................... .......................................... 4, 13 Boelter v. Hearst Commc’ns, Inc. , 2016 WL 3369541 (S.D.N.Y. June 17, 2016) .......... ............................ 10 Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n , 447 U.S. 557 (1980) ............................... ................................ 4, 5, 11, 16 Citizens for Free Speech, LLC v. City of Alameda , 114 F. Supp. 3d 952 (N.D. Cal. 2015) .............. ................................... 10 Citizens United v. Fed. Elec. Comm’n , 558 U.S. 310 (2010) ............................... ................................................ 3 City of Cincinnati v. Discovery Network, Inc. , 507 U.S. 410 (1993) ............................... ................................................ 5 City of Renton v. Playtime Theatres, Inc. , 475 U.S. 41 (1986) ................................ ................................................. 8 Contest Promotions, LLC v. City & Cnty. of San Fran cisco , 2015 WL 4571564 (N.D. Cal. July 28, 2015) ......... ....................... 10–11 CTIA—The Wireless Assoc. v. City of Berkeley , 139 F. Supp. 3d 1048 (N.D. Cal. 2015) ............. .............................. 9–10 Davidson Cnty. v. Elrod , 232 S.W.2d 1 (Tenn. 1950) ......................... ......................................... 17iv

Geeslin v. State Farm Lloyds , 255 S.W.3d 786 (Tex. App..—Austin 2008, no pet.) .. ......................... 14 Geft Outdoor LLC v. Consol. City of Indianapolis & Cnty. of Marion , 2016 WL 2941329 (S.D. Ind. May 20, 2016) ........ ................. 10 Lamar Central Outdoor, LLC v. City of Los Angeles , 245 Cal. App. 4th 610 (2016) ...................... ........................................ 11 Lone Star Security & Video, Inc. v. City of Los Ang eles , 827 F.3d 1192 (9th Cir. 2016) ..................... ........................................ 10 Lotze v. Washington , 444 U.S. 921 (1979) ............................... ................................................ 7 Markham Advertising Co. v. Washington , 393 U.S. 316 (1969) ............................... ................................................ 7 Marks v. United States , 430 U.S. 188 (1977) ............................... ................................................ 9 Mass. Assoc. of Private Career Schs. v. Healey , 159 F. Supp. 3d 173 (D. Mass. 2016) ............... ................................... 10 Members of the City Council v. Taxpayers for Vincen t , 466 U.S. 789 (1984) ............................... ............................................ 7–8 Metromedia, Inc. v. City of San Diego , 453 U.S. 490 (1981) ............................... .............................. 3, 6, 7, 9, 18 Newman Signs, Inc. v. Hjelle , 440 U.S. 901 (1979) ............................... ................................................ 7 Northland Family Planning Clinic, Inc. v. Cox , 487 F.3d 323 (6th Cir. 2007) ...................... ......................................... 17 Ohralik v. Ohio State Bar Ass’n , 436 U.S. 447 (1978) ............................... ................................................ 4 Peterson v. Village of Downers Grove , 2016 WL 427566 (N.D. Ill. Feb. 4, 2016) ........... ................................. 10v

Pruett v. Harris Cnty. Bail Bond Bd. , 249 S.W.3d 447 (Tex. 2008) ........................ ........................................ 16 Reed v. Town of Gilbert , 135 S. Ct. 2218 (2015) ............................

..................................... passim Rodriguez de Quijas v. Shearson/Am. Express, Inc. , 490 U.S. 477 (1989) ............................... .............................................. 19 Rose v. Doctors Hospital , 801 S.W.2d 841 (Tex. 1990) ........................ ........................................ 15 Second Amendment Arms v. City of Chicago , 135 F. Supp. 3d 743 (N.D. Ill. 2015) .............. ..................................... 10 Suffolk Outdoor Advertising Co. v. Hulse , 439 U.S. 808 (1978) ............................... ................................................ 7 Texas Dep’t of Transp. v. Barber , 111 S.W.3d 86 (Tex. 2003) ......................... ........................................... 8 Thomas v. Schroer , 127 F. Supp. 3d 864 (W.D. Tenn. 2015).............. ............................ 9, 17 United States v. Salerno , 481 U.S. 739 (1987) ............................... .............................................. 13 Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc. , 425 U.S. 748 (1976) ............................. .......................................... 4 Valentine v. Chrestensen , 316 U.S. 52 (1942) ................................ ................................................. 4 Statutes and Rules 23 U.S.C. § 131(b) ................................

................................................... ... 1 Tex. Gov’t Code § 311.032(c) ...................... ............................................. 15 Tex. Transp. Code §§ 391.001–430.001 ............................... ................................................ 2 § 391.001(10) ....................................

................................................... 14vi

§ 391.001(12) ....................................

................................................... 14 § 391.252 .........................................

................................................... . 16 § 391.252(a)(1) ...................................

.................................................. 17 Tex. R. App. P. 49.9 ..............................

................................................... 13 Other Authorities Brief for the United States as Amicus Curiae Suppor ting Petitioners, Reed v. Town of Gilbert , 135 S. Ct. 2218 (2015) (No. 13-502), 2014 WL 4726504 .............. ................................ 18 U.S. Department of Transportation, Federal Highway Administration, Notice 4510.788: Apportionment of Federal-Aid Highway Funds for Fiscal Year (FY) 2015 Pursuant to the Highway and Transportation Funding Act of 2014, as Amended tbl.1 (Aug. 14, 2015) ..... ........................... 1–2No. 03-14-00375-CV



# In the Court of Appeals for the Third Judicial District Austin, Texas

A US P RO E NTERPRISES , LP,

Appellant , v. T EXAS D EPARTMENT OF T RANSPORTATION , Appellee

. On Appeal from the 345th Judicial District Court of Travis County, Tex as

A PPELLEE ’ S M OTION FOR R EHEARING

T O THE H ONORABLE T HIRD C OURT OF A PPEALS : The panel’s opinion provides for a sweeping remedy that invalidates two subchapters of the Texas Transportation Code, t hereby prohibiting state regulations on commercial speech and putting ten percent of the State’s federal highway funding—more than $300 mill ion—at risk. See 23 U.S.C. § 131(b). 1 This case does not call for such a broad remedy

1 The Federal Highway Administration apportioned mor e than $3.3 billion in federalaid highway funds to the State of Texas for fiscal year 2015. See U.S. Department of Transportation, Federal Highway Administration, Not ice 4510.788: Apportionment of Federal-Aid Highway Funds for Fiscal Year (FY) 2 015 Pursuant to the Highway2

because AusPro’s claims and Reed v. Town of Gilbert , 135 S. Ct. 2218 (2015), do not implicate commercial speech. The panel’s opinion correctly recognizes that “beca use Auspro’s speech here is unquestionably noncommercial, this c ase, like Reed , does not implicate commercial speech considerations.” Op inion at 5 n.10. The remedy, however, directly implicates commercial-spe ech considerations because it invalidates Subchapters B and C of the T exas Highway Beautification Act (the “Act”), Tex. Transp. Code § § 391.001–430.001, and related regulations entirely, even as applied t o commercial speech. A ban on regulation of commercial speech goes beyond the controversy in this case, the injury alleged by AusPro, and the Su preme Court’s decision in Reed

. The Texas Department of Transportation seeks panel rehearing on the panel’s remedy. The Department does not ask the Court to revisit its holding that the Act violates the First Amendment a s it applies to political speech like AusPro’s. It requests only th at the Court modify its opinion and judgment to enjoin the application of S ubchapters B and C

and Transportation Funding Act of 2014, as Amended tbl.1 (Aug. 14, 2015), https://www.fhwa.dot.gov/legsregs/directives/notice s/n4510788/n4510788_t1.cfm3

to noncommercial speech and allow those provisions of the Act to stand as they apply to commercial speech. That result is congruent to AusPro’s claim, faithful to Supreme Court precedent, and con sistent with the reasoning of the Court’s opinion. I. T HIS C ASE D OES N OT I MPLICATE C OMMERCIAL S PEECH , AND N EITHER D OES R EED . A. Commercial Speech Does Not Raise the Same Constitutional Concerns as AusPro’s Political Speec h. Because the Act applies to both commercial and nonc ommercial speech, it implicates two distinct First Amendment doctrines. Noncommercial speech—including political and ideolo gical speech— receives the highest level of constitutional protec tion. E.g. , Citizens United v. Fed. Election Comm’n , 558 U.S. 310, 339 (2010) (“The First Amendment has its fullest and most urgent applicati on to speech uttered during a campaign for political office.” (quotation marks omitted)); cf. CR.62 (“This case involves core political speech, w hich is at the heart of the First Amendment . . . .”). Commercial speech, o n the other hand, traditionally received no First Amendment protection. See, e.g. , Metromedia, Inc. v. City of San Diego , 453 U.S. 490, 505 (1981) (“Prior to 1975, purely commercial advertisements of services or goods for sale were4

considered to be outside the protection of the Firs t Amendment.” (citing Valentine v. Chrestensen , 316 U.S. 52, 62 (1942))). The Supreme Court has since held that the First Amendment applies to commercial speech, but with the caveat that “[t]he Constitution . . . accords a lesser protection to commercial speech than to other constitutionally guaranteed expression.” Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n , 447 U.S. 557, 562–63 (1980). This reflects “the ‘common sense’ distinction between speech proposing a commercial transaction, which occurs in an area traditionally subject to government regulation , and other varieties of speech.” Id. (quoting Ohralik v. Ohio State Bar Ass’n , 436 U.S. 447, 455–56 (1978)). Content-based regulation of commercial speech does not raise the same constitutional concerns as similar regulation of noncommercial speech. Indeed, the very notion of “commercial spee ch” implies a contentbased determination. See, e.g. , Bates v. State Bar of Arizona , 433 U.S. 350, 363 (1977) (“If commercial speech is to be dis tinguished, it ‘must be distinguished by its content.’” (quoting Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc. , 425 U.S. 748, 761 (1976))). Accordingly, the Supreme Court has noted that particular “featur es of commercial5

speech permit regulation of its content,” whereas “ [i]n most other contexts, the First Amendment prohibits regulation based on the content of the message.” Central Hudson , 447 U.S. at 564 n.6. B. Reed Does Not Subject Regulations of Commercial Speech to Strict Scrutiny. In Reed , the Supreme Court rewrote the rules for claims in volving content-based regulation of noncommercial speech. There, the plaintiffs challenged certain provisions of a municipal ordina nce that set different standards for different kinds of noncommercial spee ch. See Reed , 135 S. Ct. at 2224; cf. CR.67 (arguing that the Act’s election-sign exempti on is content-based because it reflects “a governmental p reference for speech concerning traditional ‘elections’ over other polit ical speech unrelated to an election”). Under then-current doctrine, interme diate scrutiny applied because the challenged provisions did not betray an effort to target particular viewpoints or messages. See, e.g. , City of Cincinnati v. Discovery Network, Inc. , 507 U.S. 410, 428 (1993) (discussing cases approving time-place-and-manner restrictions “provi ded that they are adequately justified without reference to the conte nt of the regulated speech” (quotation marks omitted)). But the Supreme Court changed course, holding that the town’s content-based rules were subject to strict6

scrutiny regardless of the underlying motive. Reed , 135 S. Ct. at 2228 (“A law that is content based on its face is subject to strict scrutiny regardless of the government's benign motive, content-neutral justification, or lack of animus toward the ideas contained in the regulat ed speech.” (quotation marks omitted)). The Department recognizes that in the wake of Reed , the Act is subject to strict scrutiny insofar as it creates content-based regulations on noncommercial speech, including the political speech at issue here. But Reed did not overrule Central Hudson or Metromedia , and it did not change the rules that apply to regulations on commercial speech. The majority opinion in Reed implicitly limited the scope of its holding when it declined to mention, much less overrule, pr evious cases upholding content-based regulations of commercial s peech. In Metromedia , for example, seven Justices concluded that the ci ty’s interest in preventing visual clutter justified a p rohibition on billboards. 453 U.S. at 507–08, 510 (plurality opinion of White , J., joined by Stewart, Marshall, and Powell, JJ.); id. at 552 (Stevens, J., dissenting in part); id. at 559–61 (Burger, C.J., dissenting); id. at 570 (Rehnquist, J., dissenting). Metromedia declined to overrule the Supreme Court’s earlier7

decision in Suffolk Outdoor Advertising Co. v. Hulse , 439 U.S. 808 (1978), summarily dismissing an appeal from a judgment sust aining “a municipal ordinance that distinguished between offs ite and onsite billboard advertising, prohibiting the former and p ermitting the latter,” Metromedia , 453 U.S. at 498. The ordinance in question define d “billboard” to mean “[a] sign which directs attenti on to a business, commodity, service, entertainment, or attraction so ld, offered or existing elsewhere than upon the same lot where such sign is displayed.” Id. at 499 (quotation marks omitted). By summarily disposi ng of the case, the Supreme Court made a decision on the merits “reject ing the submission . . . that prohibiting offsite commercial advertisi ng violates the First Amendment.” Id. at 498–99. Metromedia declined to overrule other summary decisions upholding facial and as-applied c hallenges to similar state laws. See id. at 499 (citing Lotze v. Washington , 444 U.S. 921 (1979); Newman Signs, Inc. v. Hjelle , 440 U.S. 901 (1979); Markham Adver. Co. v. Washington , 393 U.S. 316 (1969)). And in Members of the City Council v. Taxpayers for Vincent , the Court reaffirmed Metromedia , holding that “the visual assault . . . presented by an accumulat ion of signs posted on8

public property” constituted “a significant substan tive evil within the City’s power to prohibit,” 466 U.S. 789, 806–07 (19 84). Confirming the limits on the majority’s holding, Ju stice Alito wrote separately to provide examples of laws that would n ot be subject to strict scrutiny under the Court’s decision. See Reed , 135 S. Ct. at 2233 (Alito, J., concurring, joined by Kennedy and Sotomayor, JJ .). The concurrence’s non-exhaustive list included two examples with spec ial relevance to this case: “Rules distinguishing between the placement o f signs on commercial and residential property”; and “Rules di stinguishing between on-premises and off-premises signs.” Id. ; cf. Texas Dep’t of Transp. v. Barber , 111 S.W.3d 86, 99–102 (Tex. 2003) (upholding the Act’s distinction between on-premise and off-premise sign s because it regulates signs based on location and does not disc riminate against any viewpoint or subject matter); id. at 101 (“The state has simply recognized that the right to advertise an activity conducted o n-site is inherent in the ownership or lease of the property.”). 2 Because Justice Alito’s concurrence

2 Reed abrogates the Texas Supreme Court’s alternative hol ding in Barber —that “the Act is also content neutral because it is ‘ justified without reference to the content of the regulated speech.’” Barber , 111 S.W.3d at 100 & n.83 (quoting City of Renton v. Playtime Theatres, Inc. , 475 U.S. 41, 48 (1986)).9

represents the views of three members of the six-Ju stice majority, it is essential to the meaning of Reed. Cf. Marks v. United States , 430 U.S. 188, 193 (1977) (“When a fragmented Court decides a case and no single rationale explaining the result enjoys the assent o f the five justices, the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narro west grounds.”) (quotation marks omitted). Consistent with the Supreme Court’s commercial-spee ch cases and Justice Alito’s concurrence, lower courts have reco gnized that Reed does not undermine the commercial-speech doctrine. 3 The Northern District of California, for instance, cautioned that “[t]he Supreme Court has clearly made a distinction between commercial speec h and noncommercial speech, see, e.g. , Central Hudson . . ., and nothing in its recent opinions, including Reed , even comes close to suggesting that that

3 The Western District of Tennessee’s interpretation of Reed at the preliminaryinjunction stage, see Thomas v. Schroer , 127 F. Supp. 3d 864 (W.D. Tenn. 2015), carries no persuasive weight to the contrary for at least two reasons. First, it did not consider a regulation on commercial speech. See id. at 869 (referring to “billboards and signs displaying noncommercial content”). Secon d, it ignored Supreme Court decisions upholding distinctions between on- and of f-premise signs. Cf., e.g. , Metromedia , 453 U.S. at 498–99. Had the district court devote d more attention to the issue, it could not have dismissed Justice Alito’s cautionary instructions as “unsupported conclusions.” Thomas , 127 F. Supp. 3d at 873.10

well-established distinction is no longer valid.” CTIA—The Wireless Ass’n v. City of Berkeley , 139 F. Supp. 3d 1048, 1061 (N.D. Cal. 2015); see also Lone Star Sec. & Video, Inc. v. City of Los Angeles , 827 F.3d 1192, 1198 n.3 (9th Cir. 2016) (“[A]lthough laws that restrict only commercial speech are content based, see Reed [], 135 S. Ct. at 2232, such restrictions need only withstand intermediate scrutiny.”); Mass. Ass’n of Private Career Sch. v. Healey , 159 F. Supp. 3d 173, 194 (D. Mass. 2016) (rejecti ng argument that Reed overturned commercial-speech doctrine and holding that “at most, the appropriate level of First Amend ment scrutiny . . . is intermediate scrutiny under Central Hudson ”). 4 Similarly, the California

4 See also, e.g. , Boelter v. Hearst Commc’ns, Inc. , Nos. 15 Civ. 3934, 15 Civ. 9279, 39342016 WL 3369541, at *9 n.10 (S.D.N.Y. June 17, 2016) (noting that the Supreme Court “has not explicity overturned the decades of jurisprudence holding that commercial speech, and speech like it—which, inhere ntly, requires a content-based distinction—warrants less First Amendment protectio n. . . . The Court will not take that leap here.”); Geft Outdoor LLC v. Consol. City of Indianapolis & Cnty. of Marion , No. 1:15-cv-01568, 2016 WL 2941329, at *10 (S.D. In d. May 20, 2016) (“Few courts have had occasion to address it post- Reed , but the majority of courts that have considered the question have held that the holding in Reed is limited to noncommercial sign regulations and does not alter o r otherwise affect precedent relating to municipal regulations of commercial sig ns.”); Peterson v. Vill. of Downers Grove , No. 14 C 09851, 2016 WL 427566, at *4 (N.D. Ill. Feb. 4, 2016) (“Absent an express overruling by the Supreme Court of Central Hudson , which clearly applies to commercial speech like [plaintiff]’s signs, Central Hudson must be deemed to apply here.”); Second Amendment Arms v. City of Chicago , 135 F. Supp. 3d 743, 755 (N.D. Ill. 2015) (applying intermediate scrutiny to dismi ss a First Amendment challenge to city ordinance banning the display of “firearms or ammunition in [any] window”); Citizens for Free Speech, LLC v. City of Alameda , 114 F. Supp. 3d 952, 968–69 (N.D. Cal. 2015) (applying intermediate scrutiny after de termining that the challenged ban on billboards applied only to commercial speech); Contest Promotions, LLC v. City &11

Court of Appeals has held that commercial-speech do ctrine remains in force after Reed

. See Lamar Central Outdoor, LLC v. City of Los Angel es , 245 Cal. App. 4th 610, 625 (2016) (“ Reed did not cite Metromedia [] either,

so Reed certainly did not overrule or disapprove that prec edent.”). Under the Supreme Court’s discrete commercial-spee ch doctrine, regulation of commercial speech receives intermedia te scrutiny even though it is inherently content-based. See, e.g. , Central Hudson , 447 U.S.

at 564 n.6. Reed did not mention the Court’s commercial-speech doctr ine, let alone overrule it. Commercial speech simply was not before the Court. C. AusPro’s Challenge to the Act Does Not Extend to Regulation of Commercial Speech. AusPro has not challenged the Act as it applies to commercial speech, nor could it. AusPro has no reason to chall enge the Act’s regulation of commercial advertisements because it does not complain that its own commercial speech has been restricted. Without an injury to

Cnty. of San Francisco , No. 15-cv-00093, 2015 WL 4571564, at *4 (N.D. Cal . July 28, 2015) (“Because Reed does not abrogate prior case law holding that laws which distinguish between on-site and off-site commercial speech survive intermediate scrutiny, the Court holds that its prior analysis c ontinues to control the fate of plaintiff’s First Amendment claim.”).12

its own interest in commercial speech, AusPro could not establish standing to challenge the Act as applied to commerc ial speech. AusPro has consistently disclaimed any challenge to the Act’s regulation of commercial speech. It explained to th e district court: The speech that we’re talking about in this particu lar case, Your Honor, is this sign. It’s maybe not the most b eautiful sign, but it is a sign that I think we all can agre e is core political speech. It does not relate to the sale of any product. It does not relate to anything that is being market ed on the premise. It is a core political statement. 2.RR.18. Although AusPro changed its approach signi ficantly on appeal, it has not expanded its claim to attack commercial- speech regulations. In its opening brief, for instance, AusPro noted the “ distinction between commercial and noncommercial speech” but stated, “W hether this distinction remains valid is not at issue in this c ase involving noncommercial political speech.” Appellant’s Openin g Brief 21 & n.6. Even if AusPro could argue that it attempted to cha llenge the Act as it applies to commercial speech, the Court has n o basis to resolve that claim. First, the parties have not briefed Reed ’s effect on commercialspeech doctrine or the application of intermediate scrutiny to the Act. Second, AusPro cannot rely on alleged injuries to t hird parties’ commercial-speech rights, even in the guise of a fa cial challenge. Because13

Reed does not address commercial-speech doctrine, it pro vides no basis to hold that every application of the Act against c ommercial speech is invalid. See, e.g. , United States v. Salerno , 481 U.S. 739, 745 (1987) (explaining that in a facial challenge, “the challe nger must establish that no set of circumstances exists under which the Act would be valid”). AusPro cannot invoke overbreadth because that doctr ine does not apply to commercial speech. See Bates , 433 U.S. at 381 (“[W]e decline to apply [the overbreadth doctrine] to professional advertis ing, a context where it is not necessary to further its intended objective. ”). As a result, even if Reed implied that the Act is unconstitutional in every a pplication to noncommercial speech (which it does not 5 ), it provides no support for a facial challenge to the Act as applied to commercia l speech. II. S EVERABILITY P RINCIPLES R EQUIRE THE C OURT TO P RESERVE THE A CT AS I T A PPLIES TO C OMMERCIAL S PEECH . Given the limits of Reed and of AusPro’s claim, the Court was right to conclude that this case does not implicate comme rcial speech. That leaves two questions: Did the Legislature intend to regulate commercial

5 By declining to revisit points the Court has alrea dy addressed, the Department does not waive or forfeit any arguments, including but n ot limited to arguments about Reed ’s effect on the Act as applied to noncommercial sp eech. See Tex. R. App. P. 49.9.14

speech; and is it possible to apply the Act to comm ercial speech without also regulating noncommercial speech? See, e.g. , Geeslin v. State Farm Lloyds , 255 S.W.3d 786, 797 (Tex. App.—Austin 2008, no pe t.) (“The goal of severability is to retain the valid portions and applications of a statute whenever possible”). The answer to both questions i s yes. Severability allows the Court to protect AusPro’s First Amendmen t rights while respecting the Legislature’s intent to the greatest extent possible. A. The Texas Legislature Intended to Regulate Commercial Speech. The plain text of the Act leaves no room to doubt t hat the Legislature intended to regulate commercial speech. Subchapters B and C apply to “outdoor advertising,” which the Legisla ture defined to mean virtually any outdoor sign or display “designed, in tended, or used to advertise or inform.” Tex. Transp. Code § 391.001(1 0). That definition is obviously broad enough to include commercial advert isements offering goods or services. Cf. id. § 391.001(12) (defining “Specific information logo sign” as a subset of signs containing brand names o f “commercial establishments” offering particular services). Under Texas law, severability doctrine does not req uire courts to strike down a statutory provision when a particular application violates15

the Constitution. On the contrary, the Code Constru ction Act provides expressly that unconstitutional applications of a statute must be severed so that the statute remains in force as applied in all other circumstances. Tex. Gov’t Code § 311.032(c) (“[I]f any provision o f the statute or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the statute that can be given effect without the invalid provision or appli cation . . . .”) (emphasis added); cf. Rose v. Doctors Hospital , 801 S.W.2d 841, 845–46 (Tex. 1990) (severing an application of the Medical Liability a nd Insurance Improvement Act’s cap on “health care liability cla ims” to “common law claims,” which was previously held to violate the T exas Constitution, and applying the statutory cap to the plaintiffs’ wrong ful death claim, which was created “by statute, not by the common law”). H ere, insofar as the Act’s content-based regulations violate the First A mendment as applied to noncommercial speech, those applications must be severed, and the Act must continue to apply to commercial speech.16

B. The Act Can Be Executed in a Manner that Complies with Federal Law and Avoids the Potential Loss of More than $300 Million in Federal Highway Funds. The Court’s opinion shows that Subchapters B and C can be executed, as the Legislature intended, with respect to commercial speech. The Court declined to strike down Subchapter I, whi ch prohibits offpremise signs adjacent to and visible from specific highways. See Tex. Transp. Code § 391.252. The Court explained that “t he provisions in Subchapter I are not affected by our decision here because they authorize the State to regulate commercial speech along certa in specified highways, specifically off-premise signs displaying messages regarding ‘goods, services, or merchandise.’” Opinion 24–25; id. at 25 n.108 (citing Central Hudson , 447 U.S. at 563; Pruett v. Harris Cnty. Bail Bond Bd. , 249 S.W.3d 447, 456 (Tex. 2008)). The severability doctrine required the Court to preserve Subchapter I because it could be “executed as the Legislature intended in the absence of the Act’s ou tdoor-advertising regulations.” Id. at 25. The same logic applies to Subchapters B and C as applied to commercial advertisements. 6

6 To the extent Thomas v. Schroer might be thought to bear on the question, it merely shows that Tennessee law deviates from the general preference for severability. There, the district court recognized that courts ge nerally seek to “avoid ‘nullify[ing] more of a legislature’s work than is necessary,’ be cause doing so ‘frustrates the intent17

If Texas’s severability doctrine requires the Court to preserve Subchapter I because it regulates commercial speech , it necessarily requires the Court to preserve Subchapters B and C as they apply to commercial speech, including off-premise commercial signs. But by invalidating Subchapters B and C in all their appli cations, the Court’s opinion forbids the State to regulate commercial sp eech on Highway 71 but permits the State to regulate the same kind of speech on Highway

290. Compare Opinion 2 (noting that AusPro’s sign was located on Highway 71) with Tex. Transp. Code § 391.252(a)(1) (prohibiting offpremise signs on specific roads, including Highway 290). That cannot be right. State regulation of commercial speech either conflicts with Reed or it doesn’t. (It doesn’t.) A regulation of commercia l speech under Subchapter B is no less constitutional than a regul ation of commercial speech under Subchapter I. If the Court’s constitut ional holding can

of the elected representatives of the people.’ . . . For this reason where partial, rather than facial, invalidation is possible, it is the ‘r equired course.’” Northland Family Planning Clinic, Inc. v. Cox , 487 F.3d 323, 333 (6th Cir. 2007) (quoting Ayotte v. Planned Parenthood of N. New England , 546 U.S. 320, 329 (2006)), quoted in Thomas , 127 F. Supp. at 875–76. But that general rule gave way in Thomas to the contrary presumption under Tennessee state law, which declar ed that “severance of unconstitutional portions of a statute is generally disfavored.” Id. at 876 (citing Davidson Cnty. v. Elrod , 232 S.W.2d 1, 2–3 (Tenn. 1950)).18

accommodate Subchapter I, it must also accommodate the application of Subchapters B and C to commercial advertisements. Cf. Metromedia , 453 U.S. at 521 n.26 (“Since our judgment is based esse ntially on the inclusion of noncommercial speech within the prohib itions of the ordinance, the California courts may sustain the ordinance by limiting its reach to commercial speech , assuming the ordinance is susceptible to this treatment.”) (emphasis added). Preserving Subchapters B and C as applied to commer cial speech not only cures an internal conflict in the panel’s opinion, it avoids an unnecessary risk to more than $300 million in feder al highway funds. As the panel noted, Subchapter I is not mandated by fe deral law, but Subchapters B and C are. Opinion 25. The United Sta tes does not believe that the federal Highway Beautification Act contain s the same constitutional flaws as the municipal code in Reed

. See Brief for the United States as Amicus Curiae Supporting Petitione rs, Reed v. Town of Gilbert , 135 S. Ct. 2218 (2015) (No. 13-502), 2014 WL 4726 504, at *28– 34. If a specific provision or application of the A ct is not clearly forbidden by Reed —and regulation of commercial speech is not—the Dep artment’s19

failure to enforce the Act puts the State’s highway funding in jeopardy. That risk is unnecessary and avoidable here. Withholding judgment on Subchapters B and Cs’ appli cation to commercial speech also respects the Supreme Court’s control over its own precedents. The Court has consistently cautioned lo wer courts that “[i]f a precedent of this Court has direct application in a case, yet appears to rest on reasons rejected in some other line of deci sions, the Court of Appeals should follow the case which directly contr ols, leaving to this Court the prerogative of overruling its own decisio ns.” Agostini v. Felton , 521 U.S. 203, 237 (1997) (citing Rodriguez de Quijas v. Shearson/Am. Express, Inc. , 490 U.S. 477, 484 (1989)). Insofar as Subchapters B and C apply to commercial speech, the Supreme Court’s com mercial-speech cases directly control. This Court should follow th ose cases and let the Supreme Court decide whether or not to overrule the m. P RAYER The Court should grant the petition for rehearing, vacate its opinion, withdraw its judgment, and issue a revised opinion and judgment holding that Subchapters B and C of the Te xas Highway Beautification Act do not violate the First Amendme nt as applied to20

commercial speech. That would preserve AusPro’s int erest, under Reed , in displaying noncommercial signs on its property. It would honor the Texas Legislature’s intent—apparent on the face of the Act—to regulate commercial advertisements as required by the federa l Highway Beautification Act and avoid the risk of losing mor e than $300 million in federal highway funds. It would follow the logic of the panel’s opinion, which correctly upheld regulation of commercial adv ertisements under Subchapter I. And it would avoid unwarranted interf erence with the Supreme Court’s commercial-speech doctrine, which w as neither considered nor curtailed in Reed. Respectfully submitted. K EN P AXTON Attorney General of Texas J EFFREY C. M ATEER First Assistant Attorney General S COTT A. K ELLER Solicitor General /s/ Matthew H. Frederick M ATTHEW H. F REDERICK Deputy Solicitor General State Bar No. 24040931 O FFICE OF THE A TTORNEY G ENERAL P.O. Box 12548 (MC 059) Austin, Texas 78711-2548 Tel.: (512) 936-6407 Fax: (512) 474-2697 matthew.frederick @texasattorneygeneral.gov C OUNSEL FOR A PPELLEE21 C ERTIFICATE OF S ERVICE On September 27, 2016, this motion was served via File & ServeXpress and e-mail on: Meredith B. Parenti P ARENTI L AW PLLC P.O. Box 19152 Houston, Texas 77224 [Tel] (281) 224-5848 [Fax] (281) 605-5677 meredith@parentilaw.com /s/ Matthew H. Frederick M ATTHEW H. F REDERICK Counsel for Appellee C ERTIFICATE OF C OMPLIANCE In compliance with Texas Rule of Appellate Procedur e 9.4(i)(2), this brief contains 4,131 words as counted by the Micros oft Word 2010 word count utility, excluding the portions of the brief exempted by Rule 9.4(i)(1). /s/ Matthew H. Frederick M ATTHEW H. F REDERICK Counsel for Appellee