Billboards are a form of outdoor advertising device placed along many public highways to attract the attention of motorists. Federal law requires state transportation agencies to control the installation and maintenance of billboards in accordance with 23 U.S.C.S. § 131 – the Highway Beautification Act of 1965 (HBA). Under the HBA, states can be penalized up to 10% of their Federal-aid highway funds if they do not exercise effective control of outdoor advertising devices (OADs).

The HBA requires each state to enter into an agreement with the Federal Highway Administration (FHWA) to control the installation and maintenance of OADs. While the HBA provides some specifics on how to control OADs, states have significant latitude when establishing OAD regulations as long as they are consistent with the HBA and their OAD agreement with FHWA. Local FHWA division offices provide oversight of state OAD programs to ensure states comply with their own statutes and regulations.

Kentucky’s OAD statutes are covered in KRS 177.830 – 177.890 and listed below (repealed statutes are excluded):

177.830 Definitions for KRS 177.830 to 177.890 

177.841 Billboard advertising prohibited — Exceptions 

177.842 Application of KRS 177.830(10) to outdoor advertising 

177.850 Purpose of KRS 177.830 to 177.890

177.860 Administrative regulations — Standards for billboard advertising 

177.863 Highway advertising devices, what prohibited — Spacing — Size — Illumination 

177.867 Acquisition of billboards by state — Compensation 

177.870 Violations declared a public nuisance

177.880 Construction of KRS 177.830 to 177.890 

177.890 Agreements with United States authorized

OAD regulations have been revised many times to address issues arising from legal cases that identified deficiencies with Kentucky’s regulatory framework. A 2022 US Supreme Court ruling (City of Austin v. Reagan) settled confusion regarding the method by which most states regulate OADs. 603 KAR 10: 040 – which was enacted in 2021 and merged multiple OAD regulations into one – describes the regulatory requirements associated with OADs in Kentucky.

KYTC does not regulate all OADs in the state — only those located within the protected area. This includes locations within 660 feet of the right of way of interstates, parkways, National Highway System routes, and Federal-Aid Primary Highways. In non-urban areas, the protected area extends beyond 660 feet if the device (1) is visible from the route’s main traveled way and (2) was built with the purpose of its message being read from the main traveled way. Within the protected area, OADs must comply with 603 KAR 10:040, which places restrictions on size, , lighting, and proximity to other OADs. Additionally, OADs may not be installed on a scenic highway or byway after it receives its scenic designation.

Before the HBA took effect, Congress passed the Bonus Act in 1958 to regulate outdoor advertising along interstates. The Bonus Act provided a monetary incentive to states that agreed to control outdoor advertising within 660 feet of interstate right of way. Ultimately 25 states (including Kentucky) enacted laws to implement the program. The program’s requirements remain in effect today.

One problematic aspect of the Bonus Act is ensuring compliance with the Kerr Amendment. This amendment permits installation of outdoor advertising devices within the protected area inside city limits or in rural areas zoned for commercial or industrial use as of September 21, 1959. Administering the Kerr Amendment has become increasingly difficult due to the scarcity of maps indicating city limits or land use classifications prior to September 21, 1959.

In practice, KYTC has approved applications for OADs in Kerr locations based on physical evidence or testimony of local citizens indicating commercial or industrial activities were present prior to September 21, 1959. However, verifying if a particular location meets the terms of the Kerr Amendment based on such testimony is difficult.

Recognizing the challenge of enforcing the program’s terms, in 1991 FHWA proposed repeal of the Bonus Act. Congress declined to take action. Without statutory changes, the only recourse for states that wish to exit the Bonus Act is to repay funds received under the program. Repayment terms are outlined in the Federal-State Bonus Agreement and vary from state to state. Two states (Georgia and North Dakota) have exited the program while a third (Iowa) partially exited the program by eliminating specific route segments under which the program would be administered. As of 2022, exiting the Bonus Act would require Kentucky making a one-time payment of approximately $2.6 million.

Exiting the program would foster more consistent oversight of outdoor advertising by eliminating confusion surrounding land use classifications from 1959. Eligibility would instead be evaluated based on current urban/rural designation and zoning.

Outdoor advertising devices in the protected area are accorded one of three legal statuses based on their compliance with current statutes and regulations.

Legally Permitted devices comply with current statutes and regulations. KYTC has authorized the construction or continued existence of the device via permit.

Nonconforming devices may have been legally erected at one time based on previous statutes or regulations but could no longer be installed based on the existing legal framework. Tey may be allowed to remain under certain conditions if KYTC issues a permit but are subject to additional restrictions that do not apply to legally permitted devices.

Illegal devices are not currently permitted and were not legal at the time of their installation. A frequent point of contention with illegal devices is when they were originally installed and the specific regulations in place at that time.

Kentucky’s OAD regulations distinguish between devices used by individual businesses to advertise goods and services on their own property and those owned by third parties to whom compensation is provided. KRS 177.830 defines an advertising device as “any billboard, sign, notice, poster, display, or other device, including the structure erected or used in connection with the display or device and all lighting or other attachments used in connection with the display or device, that is: (a) Operated or owned by a person or entity who is earning compensation directly or indirectly from a third party or parties for the placement of a message on the device; and (b) Intended to attract the attention of operators of motor vehicles on the highways.” If no compensation is derived, received, or exchanged for a device’s use, it is not regulated as an advertising device.

As such, if an individual, business, or other entity compensates someone in exchange for displaying a message, that device is considered an advertising device. These devices require a permit and are subject to all regulations governing OADs. A permit is not required for a device for which compensation has not been exchanged or derived, but certain regulations still apply.

These distinctions are necessary so business owners can have signs at their business location without requiring them to obtain a permit. The HBA recognized that businesses must be able to communicate their location and activities taking place at that location. Kentucky’s regulatory framework attempts to follow the federal requirements for control of OADs without placing an undue burden on individual business owners.

OADs in Kentucky are categorized as static or electronic. A static advertising device consists of a simple message board whose content does not change by the use of electronic or mechanical technology. Devices are still considered static even if they include a numerical display changed by an electronic or mechanical process if the size of the changeable display does not exceed half the area of the face. Examples of static devices that meet this definition include those which advertise fuel prices, lottery prize amounts, and emergency room wait times.

An electronic advertising device has its message changed by programmable electronic or mechanical processes. These are commonly referred to as LED billboards but may use other technology. Electronic advertising devices must adhere to additional regulations governing their brightness, frequency of messages, and proximity to other electronic devices. Their messages cannot blink, scroll, or contain animation or video. They must be programmed to freeze in a static display if a malfunction occurs.

Kentucky established a fee schedule for outdoor advertising following a 2019 KYTC survey of billboard programs that found fees are required in 32 of the 46 states that allowed billboard installations, including all seven of Kentucky’s neighboring states. Methods for charging fees vary from state to state, with some setting rates based on billboard location, size, or display type.

Application fees range from $1 in Maryland to $950 in Utah, with a nationwide average of $152. Since most state fee schedules were established before electronic advertising devices became widespread, very few distinguish between static and electronic permits. Of those that do, the average application fee for electronic devices is $442, and ranges from $200 in Michigan to $625 in Ohio. Many states charge additional fees for ownership transfers, operator licenses, and other activities.

Pursuant to KRS 177.860 and 603 KAR 10:040, in 2023 Kentucky will introduce fees for new OAD permit applications and renewals of existing permits. Table 1 contains the fee schedule.

No fees are currently assessed for ownership transfers, operator licenses, or other activities.

Each violation of the provisions in 603 KAR 10:040 or KRS Chapter 177 results in a penalty of $500.

KYTC has faced challenges when requiring the removal of static devices deemed illegal. KRS 177.870 holds that illegal devices are a public nuisance and may be removed by the Department of Highways. To date, KYTC’s statutory authority to remove devices on private property has been largely untested and the Cabinet has pursued litigative resolutions. Such cases often devolve into long legal battles, with very few resulting in removal of the offending device. Legal arguments surrounding such devices often center on whether the device had been legally installed at one time — making the device nonconforming rather than illegal.

When KYTC incorporated electronic devices into OAD regulations, an opportunity arose to incentivize the advertising industry to assist with these efforts. Under current regulations, an applicant who wants to install a new electronic advertising device within the protected area must document the removal of six existing nonconforming static devices. Converting a legal static advertising device in an urban area or urbanized protected area to an off-premise electronic advertising device requires an exchange of five off-premise advertising devices. Once removed, the question of prior legality at the given location no longer applies. KYTC can document the removal to support future litigation should a device be installed again at that location.

Kentucky introduced exchanges in 2015 when 603 KAR 10:021 went into effect. The concept was based on similar regulations in Florida intended to incentivize the removal of nonconforming signs along the I-75 corridor.