State By and Through Dept. of Transp. v. National Advertising Co.

• Decision Date: 06 June 1978
• Citation: 387 A.2d 745
• Parties: STATE of Maine acting By and Through its DEPARTMENT OF TRANSPORTATION v. NATIONAL ADVERTISING COMPANY.
• Court: Maine Supreme Court

Page 745

387 A.2d 745

STATE of Maine acting By and Through its DEPARTMENT OF TRANSPORTATION v. NATIONAL ADVERTISING COMPANY.

Supreme Judicial Court of Maine.

June 6, 1978.

Lester A. Olson (orally), Dept. of Transp., Augusta, for plaintiff.

Marden, Dubord, Bernier & Chandler by Albert L. Bernier (orally), Waterville, for defendant.

Before DUFRESNE, C. J., and POMEROY, WERNICK, DELAHANTY, ARCHIBALD and GODFREY, JJ.

ARCHIBALD, Justice.

The State of Maine has appealed seasonably from a Superior Court judgment for the defendant following acceptance of a report of a Referee.

The State's action, as amended, sought to enjoin the defendant from conducting off-premise outdoor advertising along "Interstate highway Route 95 and all of the primary highway routes within the State of Maine in violation of R.S. Title 32, Chapter 38, Sections 2711 to 2723, inclusive, as amended and 23 U.S.C. Section 131 . . . ." ¹ By agreement this action was referred to a Referee, the parties reserving the right to object to the acceptance of the report. Rule 53, M.R.Civ.P.

We sustain the appeal.

Review of a referee's findings of fact is limited by the well accepted rule that such findings are conclusive unless clearly erroneous. Field, McKusick and Wroth, Maine Civil Practice, § 53.4 (2d ed. 1970). We have read the record carefully and agree with the Referee's findings of fact, which we now quote in all essential parts as follows:

The Federal Highway Beautification Act, 23 U.S.C., Sec. 131 was enacted by Congress to control and limit the maintenance of advertising signs along the interstate and primary highway system. It became effective on October 22, 1965. It was designed to induce effective State action. Subsection (g) provided:

'Just compensation shall be paid upon the removal of the following outdoor advertising signs, displays and devices (1) those lawfully in existence on the date of enactment of this sub-section, (2) those lawfully on any highway made a part of the interstate or primary system on or after the date of enactment of this subsection and before January 1, 1968, and (3) those lawfully erected on or after January 1, 1968.'

The Federal share of such compensation was fixed at 75%. This created a 'hiatus' period since no compensation was provided for signs erected between October 22, 1965 and January 1, 1968. As an inducement to State action in control of signs, a penalty of 10% of the Federal share of Federal aid highway cost was imposed on states failing to act.

In an effort to avoid any penalty, an agreement and a plan were evolved as between the Maine State Highway Commission (succeeded by the Department of Transportation) and the Federal Highway Administrator. Legislation was then presented to the Maine Legislature and enacted as 32 M.R.S.A., Secs. 2711 to 2723 inclusive comprising a new Chapter 38, 'An Act Relating to Outdoor Advertising.' For the purpose of treating the issue here, it is only necessary to direct attention to certain provisions of Section 2719. Subsection 4 provides for the payment of 'just compensation' upon acquisition of signs 'lawfully in existence on the effective date of this chapter' (October 1, 1969) and 'lawfully erected on or after the effective date of this chapter.' All of the signs in issue here fell into one of these two categories. Subsection 6 provided for the acquisition of non-conforming signs by eminent domain 'when and only when the federal share of just compensation prescribed in the Highway Beautification Act of 1965 and the Federal-Aid Highway Act of 1968 is available to the State of Maine or the Maine Legislature makes a specific appropriation and such acquisition shall be in accordance with a priority to be established by the commission.' Subsection 7 provided for 'the use of the police power of the State' and for amortization of signs when Federal funds are not available or when the immediate removal of signs is not required but removal via regulation over an extended period of time, no longer than five years is 'satisfactory.'

Having discovered that Federal funds were available, the Department of Transportation took and paid full compensation for all signs erected before October 22, 1965. Because of the lack of Federal funds available for compensation, it was administratively determined within the Department that signs erected between October 22, 1965 and October 1, 1969 would be treated as amortization signs for which no compensation would be paid upon removal and that all such signs would be deemed to be fully amortized on October 1, 1974, that being the expiration of five years from the effective date of the Maine statute.

II

The Referee concluded that the primary issue raised by this litigation was whether the State could compel the removal of the defendant's nonconforming signs without the payment of compensation. In order to resolve this question, it is necessary to consider both federal and state law relative to the control of outdoor advertising.

II-A

As already pointed out in the Referee's findings, at the time this action was initiated the federal law (23 U.S.C. § 131(g)) dealing with compensation for the removal of outdoor advertising signs provided that no compensation need be paid upon the removal of signs erected between October 22, 1965 and January 1, 1968. ² Federal law seemed to mandate, however, that just compensation be paid upon the removal of all other signs. In order to clarify this point, the Secretary of Commerce sought an opinion from the U.S. Attorney General in 1966, who concluded "(a) that title I (23 U.S.C. § 131) must be read as requiring each state to afford just compensation upon removal of outdoor advertising signs as a condition of avoiding the ten per cent penalty (23 U.S.C. § 131(b)) . . . ." Cunningham, Billboard Control Under the Highway Beautification Act of 1965, 71 Mich.L.Rev. 1310 (1973). In other words, Congress did not create an absolute federal right to compensation if a state should elect to remove the signs via its police power and incur the ten per cent penalty.

In Markham Advertising Company v. State, 73 Wash.2d 405, 439 P.2d 248 (1968), several outdoor advertising companies challenged the constitutionality of Washington's Highway Advertising Control Act of 1961. The Washington statute provided for regulation under the police power without requiring the payment of compensation. The plaintiffs in Markham argued that the mandatory language of 23 U.S.C. § 131(g) required compensation and that Congress, under the Supremacy Clause of the federal constitution, had preempted this field of legislation. The Court in Markham rejected this argument, holding:

We think that the purpose of the federal statute is obviously to induce the states to act, not to require them to do so. The statute allows the state to choose between foregoing 10 per cent of its allotment of federal-aid highway funds and compliance. If Congress had intended the provisions of 23 U.S.C. § 131 (Supp. II, 1967) to be mandatory on the states, there would have been no need to attach a monetary penalty to noncompliance.

439 P.2d at 257.

Other courts have also held that state and/or municipal regulation of outdoor advertising has not been preempted by federal law. Art Neon Co. v. City and County of Denver, 488 F.2d 118 (10th Cir. 1973), cert. denied, 417 U.S. 932, 94 S.Ct. 2644, 41 L.Ed.2d 236 (1974); Sullivan Outdoor Advertising v. Department of Transportation, 420 F.Supp. 815 (N.D.Ill.1976); Donnelly Advertising Corp. v. City of Baltimore, 279 Md. 660, 370 A.2d 1127 (1977). In addition one study concludes that the congressional hearings in 1965 proceeded on the assumption that the requirements of Title I of the Highway Beautification Act were not mandatory on the states. This study reasoned that

(t)here is nothing in the hearings to indicate that the subcommittee members intended to forbid absolutely the use of any state's police power to eliminate highway advertising signs, although it was clearly assumed that few, if any, states would be willing to suffer the ten per cent penalty in order to avoid payment of just compensation to sign owners and landowners.

Cunningham, Billboard Control Under the Highway Beautification Act of 1965, 71 Mich.L.Rev. 1317 (1973).

We therefore determine that the federal Highway Beautification Act, at the time this action was initiated, did not mandate the payment of compensation for the removal of nonconforming highway signs. ³

II-B

In 1967, pursuant to 23 U.S.C. § 131(d) which authorized the Secretary of Transportation to enter into agreements with the several states to promote the orderly and effective display of outdoor advertising, Maine and the federal government entered into an agreement the purpose of which was "to promote the reasonable, orderly and effective display of outdoor advertising while remaining consistent with the National policy, to protect the public investment in the Interstate and Federal-aid primary systems, to promote the safety and recreational value of public travel and to preserve natural beauty." This agreement was to become binding on both parties after the agreement had been ratified by an act of the Maine State Legislature.

In 1969 the Legislature enacted "An Act Relating to Outdoor Advertising," P.L.1969, ch. 257, §§ 2719(6) and (7), providing as follows: ⁴

6. Eminent domain; limitation. The commission may acquire by the power of eminent domain all right, title, leasehold or any interest in nonconforming signs, and the property right to maintain signs not in conformity with this chapter when and only when the federal share of just compensation prescribed in the Highway Beautification Act of 1965 and the Federal-Aid Highway Act of 1968 is available to the State of Maine or the Maine Legislature makes a specific appropriation and such acquisition shall be in accordance with a priority to be established by the commission.

7. Police power; amortization. When the federal share of just...