Regulating Sexually Oriented Businesses

I. Introduction

A. Government Regulation of Sexually Oriented Businesses

The upshot of this outpouring of concern has been a strong trend among local governments around the country and in North Carolina to regulate sexually oriented businesses, most often by significantly restricting their location.[1] These regulations typically restrict such uses to a few zoning districts and establish minimum separations between sexually oriented businesses and a variety of other uses, most commonly other sexually oriented businesses, places of worship, schools, parks, and residential districts. Special use permits and special licensing requirements are also often used to impose restrictions on sexually oriented businesses that do not apply to other businesses.

This Special Series publication examines the legal issues associated with government regulation of sexually oriented businesses. The balance of this initial section establishes a framework for analysis—what is meant by or included within “sexually oriented businesses” and what are the basic constitutional issues that must be addressed. The second section addresses the question of what type of sexually oriented activity can be banned entirely. The publication then devotes considerable attention in a third section to the type of restrictions most frequently used by local governments—zoning restrictions on the location of sexually oriented businesses. This third section examines how far the First Amendment allows local governments to go in restricting these businesses and what a local government must do to establish a proper legal foundation for its regulations. The fourth section briefly reviews operational restrictions that can be imposed on sexually oriented businesses.

B. Defining Sexually Oriented Businesses

The difficult question in this area is defining a threshold—how much adult material must be present to make an establishment a “sexually oriented business” (or for it to be considered a place intended for “adult uses” as they are termed by some ordinances). Is a bookstore that sells a single “adult” magazine title covered? Does it have to sell “hard core” material or are more mainstream publications such as Playboy covered? Does the definition apply only to theaters that regularly screen X-rated movies, or does it also include screening movies that have any nudity presented? What about a brief nude scene in a “legitimate” play? Does the definition cover the bar with occasional topless dancers as well as bars featuring them as their regular entertainment?

To avoid being unconstitutionally vague, an ordinance regulating sexually oriented businesses must be drawn with sufficient precision that a person of normal intelligence has fair notice of what is prohibited. It must also give reasonably clear guidelines concerning the scope of the regulation for enforcement officers and the courts to prevent arbitrary or discriminatory enforcement.[3]

This requirement of avoiding unduly vague definitions has not been a significant difficulty with most ordinances regulating the location of adult bookstores, theaters, and bars. The Supreme Court’s initial case upholding a restriction on the location of sexually oriented businesses held Detroit’s ordinance was sufficiently precise when it regulated exhibitions “characterized by an emphasis on” specified sexual activities or specified anatomical areas.[4] Many local ordinances simply repeat Detroit’s same definitions verbatim. Other formulations that have been approved by the courts as being sufficiently precise include regulating establishments that have “a substantial or significant portion,”[5] a “preponderance,”[6] or a set percentage[7] of their merchandise or exhibitions devoted to sexually explicit material; regulating businesses that have dancing that “emphasizes and seeks, through one or more dancers, to arouse or excite the patrons’ sexual desires” and prohibiting dancers from “caressing” or “fondling” the patrons;[8] and regulating theaters that “on a regular basis” show films minors are prohibited from viewing.[9]

On the other hand, an ordinance that applied to “adult theaters” without defining the term was held to be impermissibly vague.[10] Also, an ordinance that is drafted to cover any and all sexually explicit material, including a single magazine, performance, or film showing, faces significant legal problems if challenged.[11]

Even definitions found adequately precise by the courts can still, however, be subject to contentious battles over interpretation. For example, one Charlotte establishment attempted to circumvent a definition based on having a “preponderance” of sexually explicit material by adding a large volume of used paperback books in their book section and screenings of prize fights in their video booths, then contending that at least 51 percent of their stock was “non-adult” material. After a lengthy hearing, the board of adjustment rejected this subterfuge, ruling preponderance related more to the weight, force, and impact of the material, and not to a mathematical counting of numbers of items available.[12]

A final aspect of definitions that requires careful consideration is the question of exemptions. Many local governments draft their regulations regarding sexually oriented businesses to exempt mainstream businesses, such as legitimate theatrical productions or providers of therapeutic massage. Some ordinances exempt all regulation of protected speech, thus avoiding First Amendment review altogether.[13] A few local governments have unsuccessfully attempted to avoid problems with unduly infringing on First Amendment rights by exempting businesses with only a small percentage of their business devoted to sexually explicit material.[14]

C. Overview of Constitutional Issues

1. First Amendment

The First Amendment protects rights of free speech. A critical threshold question is what is included within protected “speech.” Protected speech includes not only the spoken word, but also books, films, theatrical productions, and dance.

First Amendment cases that address political expression are familiar to many. For example, in recent years the Supreme Court has applied the First Amendment to protect citizens’ rights to post protest signs in their yards and windows,[15] to burn a flag in symbolic protest,[16] and to wear armbands to protest government policies.[17] First Amendment protections apply not only to political speech, but to commercial speech as well. The general standard for regulation of commercial speech is set forth in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York.[18] This 1987 case established a four-part test for restrictions on commercial speech:

Even though adult books, films, and performances have some First Amendment protection, there are two important types of “speech” that do not receive First Amendment protection. Both have important implications for regulation of sexually oriented businesses.

The first type of speech with no First Amendment protection is obscenity. When books, movies, or dance cross the line from “sexually explicit” to “obscene,” they become illegal and may be banned entirely. For example, in North Carolina if a female dancer exposes her breasts, this is “sexually explicit” dancing that can be subject to local restrictions (but not prohibition). If she exposes her genitals, this is “obscene” and is a prohibited criminal act that has no First Amendment protection. This distinction is discussed in more detail below in the sections on obscenity and indecent exposure.

The second type of “speech” with no First Amendment protection is conduct. The boundary between conduct that is “symbolic speech” and is protected and “conduct” that can be prohibited is sometimes difficult to discern. If a protester burns the American flag, is this action a political statement protected as speech, or is it illegal conduct? What about burning a draft card? The Court held flag burning to be protected speech[20] but draft card burning to be conduct. In the latter case, United States v. O’Brien,[21] the Court established a four-part test to determine whether First Amendment free speech rights are impermissibly burdened by a particular governmental regulation of “symbolic” conduct:

In the context of sexually oriented business, the question arises whether dancing completely or nearly nude is speech or conduct. Justice Scalia has proposed that nudity in and of itself be declared conduct that could always be prohibited.[22] No other justices currently share this view, however, and “erotic dancing” is considered symbolic speech. While the Supreme Court has debated just how much First Amendment protection is to be provided to commercial sexually explicit speech,[23] even nude or semi-nude dancing receives some degree of constitutional protection.[24]

Another concept in First Amendment law that is crucial in regulation of sexually oriented businesses is “content neutrality.” This is critically important because if a restriction on protected speech is based on the content of the speech, strict scrutiny is applied by the courts. Such a regulation must be narrowly drawn to accomplish a compelling governmental interest in order to be sustained,[25] a very difficult burden that is met only in extraordinary situations.[26] On the other hand, an ordinance that is content neutral can regulate the “time, place, and manner” of speech.[27]

A regulation is content neutral if it is “justified without reference to the content of the regulated speech.”[28] This test is sometimes phrased by the courts as a requirement that the regulation be “substantially unrelated to suppression of speech.”[29] A regulation of sexually oriented businesses is deemed by the courts to be “content neutral” if the predominant concern leading to its enactment is with the secondary impacts of the speech rather than the content of the speech itself. The Court has held that “secondary effects” do not include the reactions of those hearing the speech.[30] Secondary effects do include impacts on the viability of surrounding neighborhoods but not the potential psychological damage to the viewers of sexually explicit material.[31]

2. Equal Protection

The Equal Protection Clause requires that similarly situated persons and businesses be treated alike. Operators of sexually oriented businesses often make two equal protection challenges to government restrictions on their business.

First is the challenge that it is unfair to restrict adult bookstores, bars, or theaters without placing similar restrictions on all bookstores, bars, or theaters. The argument here is that, for example, a topless bar has the same impacts on traffic, noise, and the neighborhood as a regular bar; and therefore the topless bar and the regular bar should be regulated alike. Courts have, however, held there is a rational basis for different treatment of adult businesses and their “non-adult” counterparts because of the different secondary impacts of the two.[32]

Second, an equal protection challenge is also raised where the ordinance regulates some but not all sexually oriented businesses. The argument here is that it is unfair, for example, to regulate an adult theater without also regulating an adult bookstore. The courts have uniformly rejected such an argument.[33] Governments may choose to regulate some aspect of a problem without being compelled to address every aspect of that problem. However, categories for regulation should be chosen carefully. Glaring over- or under-inclusiveness can be used to establish that an ordinance is not rationally related to a legitimate governmental objective and thus violates the Equal Protection Clause.[34]

3. Twenty-first Amendment

At one time it appeared that the authority granted to states by the Twenty-first Amendment to regulate alcohol sales might well provide a rationale to justify greater restriction on First Amendment rights than might otherwise be the case. In California v. LaRue,[35] the Supreme Court in 1972 upheld a prohibition of acts of “gross sexuality” in facilities with ABC licenses. The Court noted the state’s broad authority under the Twenty-first Amendment to regulate the sale of liquor may justify restrictions on protected speech in establishments serving alcohol that would not be justified if applied to other types of businesses. Subsequent cases used this rationale to justify a ban on topless dancing in facilities with liquor licenses.[36]

However, the Supreme Court recently ruled that while the Twenty-first Amendment grants states authority to regulate commerce, it in no way reduces the protections afforded by the First Amendment.[37] In a case striking down restrictions on advertising retail prices of alcoholic beverages, the Court held that “the States’ inherent police powers provide ample authority to restrict the kind of ‘bacchanalian revelries’ described in the LaRue opinion regardless of whether alcoholic beverages are involved. . . . Without questioning the holding in LaRue, we now disavow its reasoning insofar as it relied on the Twenty-first Amendment.”[38] Justice O’Connor’s concurring opinion adds, “The Twenty-first Amendment does not trump First Amendment rights or add a presumption of validity to a regulation that cannot otherwise satisfy First Amendment requirements.”[39]

II. Banning Sexually Oriented Businesses

Obscenity and indecent exposure are banned by state law. There are also state laws in North Carolina that ban location of more than one adult-use establishment in a single building, that ban lewd activities in establishments with alcohol licenses, and that prohibit the maintenance of a public nuisance.

The exact scope of these state statutes is critically important because it limits the range of regulatory options available to local governments. Local governments may not adopt regulations on sexually oriented businesses that duplicate or are contrary to state laws.[40] The statute on preemption, however, provides that the fact that a state or federal law, standing alone, makes a given act, omission, or condition unlawful does not preclude city ordinances requiring a higher standard of conduct. In State v. Tenore,[41] the court held that the state obscenity statutes had not entirely preempted this field and that more restrictive local regulations might be legally possible. However, the court went on to rule that an Onslow County ordinance prohibiting topless dancing was invalid because it purported to regulate the same conduct addressed by state statutes.

A. Obscenity

The North Carolina statutory definition of obscenity, which has been updated several times to conform to judicial definitions of the scope of First Amendment protections, defines material (including writings, pictures, records, films, tapes, plays, dance, and performance) as obscene if

Several aspects of this definition are noteworthy. First, the statute specifically defines the depictions of “sexual conduct” covered. The statute defines specified “sexual conduct” as

B. Indecent Exposure

The first critical question in the application of this statute to adult entertainment is just what are “private parts”? In State v. Jones,[53] a topless dancer at The Keg in Raleigh was charged with violation of this statute. The court of appeals held that “private parts” are male and female genitalia and do not include female breasts.[54] Thus the indecent exposure statute prohibits “bottomless” but not “topless” dancing.[55] The supreme court subsequently invalidated an Onslow County ordinance that included “the breasts of a physically developed female” within the definition of “private parts,” ruling that the state indecent exposure statute precludes a city or county ordinance that purports to prohibit topless dancing because it regulates the same behavior covered by the state statute.[56]

A second critical question is what is a “public place” for the purposes of this statute? In upholding a conviction for indecent exposure in a nightclub, the court held there is “nothing whatsoever in the present or former indecent exposure statutes that in any way requires the viewers of the exposure of one’s private parts to be unwilling observers.”[57] Thus exposure in a private club to “willing” viewers is covered, as is exposure in parking lots and streets.[58]

Could the state legislature change the law by specifically amending the indecent exposure statute to prohibit exposure of female breasts by dancers in topless bars and clubs since the legislature can generally change the common law by enacting a statute? In this instance, however, the First Amendment may well limit the General Assembly’s ability to expand the coverage of this statute. The Supreme Court has twice addressed the constitutionality of laws attempting to ban topless dancing. The Court in 1981 in Schad v. Borough of Mt. Ephraim[59] held that a total ban on all commercial live entertainment by a Philadelphia suburban community, a measure adopted to close a “peep show” in an adult bookstore, was unconstitutional. The Court held the borough had not established any justification for a total ban and had failed to provide adequate alternative channels for the presentation of speech protected by the First Amendment, including non-obscene nude dancing. But the Court in 1991 upheld an Indiana statute prohibiting “totally nude” dancing in Barnes v. Glen Theater, Inc.[60] The issue in Barnes was that of regulation rather than a total ban on erotic dancing. As has been the situation in a number of First Amendment cases, Barnes produced a fractured court—in this instance there were four separate opinions—that supported regulation rather than a total ban on dancing. Chief Justice Renquist’s plurality opinion, joined by Justices O’Connor and Kennedy, held that nude dancing was on the periphery of protected speech and that the requirement of this statute that dancers wear very minimal costumes was a narrowly tailored response to the important governmental interest of protection of public morals. Justice Scalia would have held the regulation valid as a general law applying to conduct—nudity in this instance—rather than speech and therefore not subject to First Amendment scrutiny at all. Justice Souter’s narrowly drawn concurring opinion applying the O’Brien tests in the context of regulating secondary impacts provided the necessary fifth vote to sustain the regulation.[61] As the only portion of the Barnes decision supported by a majority of the Court, Justice Souter’s opinion has been influential in subsequent decisions.[62] Thus, for North Carolina to amend its indecent exposure statute and ban topless dancing altogether in a manner consistent with the Barnes decision, it would be necessary to establish negative secondary impacts from topless bars, as opposed to simply prohibiting topless dancing per se.

C. Other Statutes

One federal court has held that this statute preempts any more restrictive local requirement that separates sexually oriented businesses.[65] The contested ordinance was a general county ordinance, not adopted as part of a general zoning ordinance, that required sexually oriented businesses to be located at least 1,000 feet from dwellings, places of worship, schools, parks, and other sexually oriented businesses. The ordinance required existing businesses that were not in compliance to close or relocate within two years. The court held this restriction on location of the businesses regulated the same subject as G.S. 14-202.11 and was thus preempted. It should be noted though that the state statute applies to the number of adult businesses located within a single structure and is completely silent as to where that building may be located relative to surrounding land uses. Thus it is unlikely (though possible) that state courts will extend this rationale to hold that the statute preempts the many zoning restrictions on location of sexually oriented businesses.

The North Carolina statutes governing alcohol sales also include specific restrictions on adult entertainment. These statutes reemphasize the state’s indecent exposure and obscenity laws.[66] Among other things, under G.S. 18B-1005(a) the following conduct is prohibited on the premises of any facility with an ABC permit:

G.S. 14-190.13 to 14-190.19 make it criminal offenses for the participation of minors in a variety of sexual activities, including participating in or viewing topless dancing or viewing non-obscene but sexually explicit materials. The courts have long upheld restrictions designed to prevent minors from being exposed to sexually explicit material.[69] Thus any adult establishment must limit its patronage to those over the age of eighteen.

Finally, state law on nuisance abatement[70] provides an additional enforcement tool should an adult entertainment business provide obscene materials as a principal or substantial[71] part of its business. G.S. 19-1 makes the use of a building for the purposes of illegal possession or sale of obscene films or photographs[72] a public nuisance. This statute also defines us of the property for prostitution, assignation, or sale of illegal drugs or alcohol a nuisance. For the purposes of this nuisance statute, “prostitution” has been held to include any physical contact with a person’s genitals, buttocks, or breasts for a fee.[73] A private citizen, as well as the state or a local government, can institute a court action to secure an injunction to prohibit use of a building for such purposes.[74] The statute not only allows all obscene material to be seized as contraband, it allows all of the gross proceeds from unlawful activity to be forfeited to the general fund of the local government in which the nuisance was maintained[75] and allows the prevailing party to recover reasonable attorney fees.[76]

III. Regulating the Location of Sexually Oriented Businesses

A. Overview of Key Supreme Court Cases

There are several important aspects of the Young decision. First, the ordinance in question was based on protection of neighborhoods from deterioration, not a community objection to the content of adult entertainment.[81] The ordinance required dispersal of a number of “regulated businesses” that could cause a “skid row” effect if unduly concentrated.[82] In addition to adult theaters and bookstores, the ordinance prohibited a concentration (more than two uses within 1,000 feet of each other) of cabarets, bars, pawnshops, pool halls, hotels, lodging houses, secondhand stores, and even shoeshine parlors. Second, the ordinance was based on an established local problem. There was evidence that in the five years leading up to adoption of the ordinance, the number of adult theaters in Detroit had risen from two to twenty-five, with a comparable increase in the number of other adult establishments. Third, the ordinance did not purport to substantially restrict the availability of constitutionally protected speech (which includes non-obscene adult films and books). The court distinguished this modest separation requirement for multiple adult establishments from a total ban on protected speech, noting the ordinance did not limit the total number of adult establishments in the city nor deny ready access as establishments for adult uses could still be located in any commercial district as long as there were not already two other such uses nearby.[83]

Ten years later a somewhat more sympathetic court[84] revisited this question and upheld a more restrictive location ordinance in City of Renton v. Playtime Theatres, Inc.[85] Renton, a city of 32,000 located just south of Seattle, adopted an ordinance requiring adult theaters to be located at least 1,000 feet from any residential zone, residence, church, park, or school. The effect of this was to leave only 520 acres, about 5 percent of the city’s land area, available for use by adult theaters.

Justice Renquist, writing for a six-member majority of the Court, held that Renton’s ordinance should be reviewed as a content neutral time, place, and manner restriction on free speech. The ordinance was deemed to be “content neutral” even though there was differential treatment of theaters based on the type of films being shown. The court reasoned that the content of the films was not the basis of the ordinance because the city council’s “predominate concern” in adopting it was the secondary effects of adult theaters on the surrounding neighborhood.[86] The court held that the critical inquiry in determining the validity of a restriction on the location of premises for adult uses is whether the ordinance “is designed to serve a substantial governmental interest and allows for reasonable alternative avenues of communication.”[87]

There are several particularly notable aspects of the Renton decision. First, the Court did not impose particularly stringent requirements on the degree of effort a local government must undertake to demonstrate the need for regulation of adult businesses. In Renton, the governing board’s findings relative to secondary impacts, which formed the basis for establishing the city’s requisite substantial interest, were added to the ordinance after litigation was commenced. Also, the city was allowed to rely on studies prepared by neighboring Seattle, rather than having to document any negative secondary impacts of adult theaters in Renton itself. The court held studies from other locations could be the basis of the restriction “so long as whatever evidence the city relies upon is reasonably believed to be relevant to the problem the city addresses.”[88] Second, the court allowed the regulations to be imposed as a preventive rather than a corrective measure. There were no adult establishments at all present in Renton when the ordinance was adopted. Third, the court allowed a substantial restriction, but not total exclusion, on the availability of permissible sites for adult entertainment. The court held that leaving 5 percent of the city’s land area potentially open to adult uses allowed “reasonable alternative avenues” for protected speech. The court noted that while the city could not effectively deny the opportunity to open and operate an adult theater within the entire city, the adult entertainment operators would have to fend for themselves in the real estate market. The city has no obligation to assure that sites are readily available at bargain prices.[89]

In sum, the Young and Renton decisions established the following tests for determining the validity of local regulations on sexually oriented businesses with First Amendment protection. To be upheld, the restrictions must

B. Establishing a Legitimate Purpose for Regulation: Motive and Content Neutrality

To be considered “content neutral” the predominant purpose of the regulation of adult business location and operation must be to prevent harmful secondary impacts—neighborhood blight, increases in crime, decreases in property values, and the like. It is not unusual for the public record surrounding the adoption of local restrictions on adult uses to contain a number of statements from members of the public, the city or county staff, and governing board members regarding other purposes of the regulatory action. It is commonplace that many, sometimes most, of these comments focus on the content of the speech. What if there is a memo from the city planner or county attorney in the file noting that their purpose in drafting the regulation was to “run adult businesses out of town”? What if a majority of the board members adopting the ordinance explicitly state in the minutes of the meeting that they have acted in order to rid the community of immoral books, material that is degrading to women, or sleazy performances they feel are inherently evil and are detrimental to the character of their community?

As a general rule, the actual motives of the governing board in adopting the regulation are irrelevant. Noting it is best to eschew altogether the guesswork inherent in determining legislative motive, the Supreme Court has held, “It is a familiar principle of constitutional law that this Court will not strike down an otherwise constitutional statute on the basis of an alleged illicit legislative motive.”[91] Courts examine the regulation itself rather than the motive of the adopting body to determine if the regulation serves a legitimate purpose. As the Fifth Circuit Court of Appeals noted in reviewing a Houston, Texas, ordinance restricting the location of topless bars, “We do not ask whether the regulator subjectively believed or was motivated by other concerns, but rather whether an objective lawmaker could have so concluded, supported by an actual basis for the conclusion.”[92] The statement of purpose in the regulation and the specific terms of the restrictions are the key factors to be examined, not the personal statements of motive from citizens, staff, or elected officials.

Though advisable, it is not absolutely necessary that a regulation of sexually oriented businesses have a statement of purposes regarding secondary impacts. In the Barnes case, Justice Souter was willing to infer an intent to regulate to address secondary impacts based on the terms of the regulation.[93] However, a section of the ordinance on “Findings” or “Statement of Purpose” is prudently used to explicitly set out concern about secondary impacts of adult businesses as a foundation for regulatory action. These provisions can be important in establishing the validity of the regulation. For example, when the Little Rock, Arkansas, governing board was considering adult business regulations, there was a memo in the files from the city attorney to his staff asking for legal analysis of steps the city could take to regulate adult businesses, with the notation, “Please get together and draft a legal opinion on this—I want to shut these places down! Somehow.” The subsequently adopted ordinance had a number of “whereas” clauses, all related to detrimental secondary impacts. When the ordinance was challenged, the reviewing court held the stated purpose of the ordinance was important; the personal motivation of the city attorney and any “hidden motive” of the council were not.[94]

Still, a local government places itself at some risk of having its regulations invalidated if it treats the requirement of having a predominate purpose of addressing secondary impacts as a legal fiction to be given lip service but otherwise ignored.[95] This is particularly the case if the record indicates the restrictions have been hurriedly adopted to stop a single business. It is not unusual for zoning amendments to be proposed to deal with particular emerging issues. However, since these particular types of restrictions must have a predominate purpose of addressing secondary impacts, many courts are particularly sensitive to First Amendment infringements when the record of local consideration contains only expressions of moral outrage about the content of adult entertainment.

The judicial fate of a Pensacola, Florida, ordinance illustrates this point.[96] There had been topless bars in town for a number of years. Then, the Rawhide Topless Go-Go & Lounge, complete with large pictures of go-go girls painted on the side of the building, opened next door to the Brownsville Baptist Church. Church members and other concerned citizens immediately bombarded the city council with complaints contending that topless bars were an affront to all standards of decency, public sensibility, and propriety. The council instructed the city attorney to prepare the strongest possible ordinance to ban nude dancing in the city. The city then quickly adopted a regulation banning topless dancing in facilities selling alcohol, even though the police chief and city attorney had advised the council that the city’s existing topless bars presented no greater crime problems or neighborhood impacts than other bars. When challenged in court, the ban was invalidated, the court holding that mimicking another city’s ordinance or putting language on secondary impacts in the preamble was insufficient to establish a predominate purpose of addressing secondary impacts where there was no evidence of any concern other than with the moral content of the performances. The court concluded, “The general reluctance to plumb the legislative psyche does not mandate, however, that we turn a deaf ear to a record that establishes with unmistakable clarity the actual motives of the legislators in this case.”[97]

C. Establishing a Foundation for Regulation: Relevant Studies of Secondary Impacts

The courts have widely held that there are substantial and legitimate governmental interests in protecting adjoining neighborhoods from blight, preventing traffic and litter problems, preventing crime, promoting consistency with adopted land use plans, and maintaining property values.[98] The key question here is the extent of analysis each individual local government must conduct in order to determine if the specific regulation of sexually oriented businesses proposed for that community will in fact address these legitimate concerns. Can a small town or rural county rely on studies from a major urban center halfway across the country? Can a city rely on the observations of its officials and citizens, or is a professional study required? Can a study on the impacts of a massage parlor be used to justify restrictions on a video rental store? These are critical questions because very few local governments conduct their own local planning studies to document adverse secondary impacts.[99]

Local governments have an affirmative burden to establish a relationship between the restriction on protected First Amendment rights and the harms to be prevented. As with the motive question, however, the courts have been fairly lenient about this requirement. The courts have not been as demanding on establishing a substantial link (or nexus) between the means and ends of the regulation as has been the case in the property rights area.[100] For example, Justice Renquist noted in the Renton decision that each individual local government is not required “to conduct new studies or produce evidence independent of that already generated by other cities, so long as whatever evidence the city relies upon is reasonably believed to be relevant to the problem that the city addresses.”[101] In that case the city relied on extensive studies from an adjoining city.[102]

A wide variety of studies have been found by the courts to meet this standard of “reasonably believed to be relevant.” For the most part courts have deferred to local elected officials’ legislative judgment in determining what studies are relevant. Some local governments have successfully used professional staff to make a study of the issue and assist in designing an ordinance that is specifically tailored to local needs.[103] A local government can also solicit analysis from local law enforcement personnel[104] and the legal staff.[105] In a number of instances, extensive public hearings and planning board discussions have been important in tailoring an ordinance to a particular community’s needs.[106] This local information, analysis, and debate is the best and legally safest approach for developing regulations on sexually oriented businesses.

It is also permissible to anticipate problems[107] by reviewing experiences elsewhere[108] and conducting a legal review of other ordinances and court decisions.[109] Courts have cautioned that there is a need to examine the studies underlying the other ordinances, not just their judicial validation.[110] In one of the decisions most sympathetic to local governments, the Fourth Circuit Court of Appeals in upholding a regulation on the location of adult bookstores simply concluded that local governments could take notice of or assume matters of “common knowledge and experience,” which the court held includes the “notorious and self-evident” harmful secondary impacts of adult businesses.[111] The court tempered this with the admonition that local governments should limit their consideration to what has been generally experienced in “similarly situated” or “generally comparable” communities.[112]

Despite this judicial deference to local legislative judgment on the relevance of studies and experiences in other locales, courts will invalidate ordinances where there is no evidence at all in the record to justify a concern about secondary impacts.[113] This is particularly the case if there are existing adult businesses in the jurisdiction that have had no problems.

Local governments should also be careful to assure that the studies used are in fact related to the type of sexually oriented business being regulated. Several ordinances have been invalidated due to unsupportable inferences about the scope of potential adverse secondary impacts, especially when the regulation is aimed at businesses of a different character from those studied. For example, studies of the deleterious secondary impacts of a full-time adult theater should not be used to justify restrictions of a single showing of an adult film. In invalidating a location restriction that applied to any theater “temporarily or permanently used” to show adult films, the Ninth Circuit Court of Appeals held “there must be a logical relationship between the evil feared and the method selected to combat it.”[115] The court went on to conclude, “Nor do we see how the County could make such a showing, since it is difficult to imagine that only a single showing ever, or only one in a year, would have any meaningful secondary effects.”[116] Similarly, some courts have been reluctant to sanction use of a study of the impacts of one type of adult business—such as a theater with live peep shows—to a totally different type of business—such as one with rental videos only.[117] These considerations also raise questions about expansive definitions of “sexually oriented business” to include businesses for which no studies of secondary impacts have been conducted, such as including cabarets with female impersonators within the scope of a regulation based on studies of adult bookstores.

Also, care should be taken to prepare the necessary information in the course of consideration of adoption of restrictions, not afterwards in response to litigation. Courts generally will allow use of studies conducted after the adoption of the regulation, but only if they supplement some information available prior to adoption.[118] While it is not necessary that the elected officials actually personally review all of the studies, they should be aware of the existence of the studies and have the opportunity to review them prior to adoption of restrictions if desired.[119]

D. Establishing the Bounds of Restriction: Reasonable Alternative Avenues

Not surprisingly, defining the boundary between permissible reasonable limitations and de facto exclusion is a subject that has been frequently litigated as many local governments have attempted to come as close to that line as possible without passing it. A number of courts have upheld restrictions that generally fall close to the Renton facts—limiting adult uses to about 5 percent of the jurisdiction’s area.[123] On the other hand, courts have invalidated restrictions that effectively leave no alternative sites available.[124] Cases on the borderline, such as only allowing 1 percent of the city’s area for this type of use, have gone both ways.[125]

The test increasingly applied by the courts requires a case-by-case analysis of the detailed facts of each situation, with the critical inquiry being whether the application of the regulation leaves realistic sites available within the jurisdiction’s commercial real estate market that could be used for protected adult speech.[126] There is not a need to show that adult establishments could be profitably operated at such alternative sites; but if the costs of improvements necessary to make a site suitable for any commercial use are so high as to be prohibitive, the site cannot be realistically considered part of the commercial real estate market. Similarly, if the land is permanently dedicated to other uses (such as a municipal airport or landfill), the fact that it is technically “available” under the ordinance is irrelevant as that land is not part of the commercial real estate market.[127] In Topanga Press, Inc. v. City of Los Angeles, the Ninth Circuit Court of Appeals proposed the following guides to determining whether property should be considered part of the relevant commercial real estate market (and thus available as a potential reasonable alternative avenue for conveying protected speech):[128]

E. Establishing a Required Focus: Narrowly Tailored Regulations

A challenge based on lack of narrow tailoring most frequently arises when a restriction is drafted so tightly as to preclude even a single showing or rental of an adult film or performance or to include sale of even a single publication that includes adult materials. Examples of ordinances invalidated on this basis include: an ordinance that banned any female topless appearance in any public place;[132] an ordinance that applied to any theater even temporarily used for presentation of adult films;[133] an ordinance that applied to “any” depiction of specified sexual activity, no matter how brief;[134] an ordinance that purportedly addressed traffic problems but only applied to one topless bar and not twenty other nearby bars without adult entertainment;[135] and an ordinance that prohibited any exhibition of nudity.[136] Ordinances have also been invalidated that based a separation requirement on the presence of any residence (e.g., requiring the adult-use establishment to be 500 feet from any residence as opposed to 500 feet from a residential zoning district), the court reasoning that such a restriction is not narrowly tailored because the residence may be an isolated dwelling with no surrounding neighborhood to protect or may well not contain any children.[137]

The invalidation of two Onslow County, North Carolina, ordinances attempting to regulate “movie mates” and “escort services” illustrate the difficulty of narrowly tailoring an ordinance to regulate adult business other than bookstores, theaters, and topless bars. The first[138] involved a 1985 ordinance designed to address establishments known as “movie mates”—where female employees joined male customers in a booth to watch adult movies—and thought to be fronts for prostitution and other crimes. These businesses had arisen after the county severely restricted massage parlors in 1978, an action the court characterized as causing “the chameleon of adult entertainment to appear in novel hues.”[139] In an attempt to foil such ingenuity, the county adopted an ordinance licensing “companionship businesses.” The court, however, held the regulation overbroad and thus not rationally related to a substantial governmental purpose.[140] The court ruled regulation of “companions” is “broad enough to encompass both the salubrious and the salacious,”[141] as it captures both companions for the elderly in nursing homes as well as movie mates in adult mini-theater viewing booths. The county’s second attempt to regulate these businesses was a 1988 ordinance regulating “escort bureaus”; and it, too, was invalidated.[142] The ordinance required escort bureaus and each “escort” to be licensed, required a record of each client to be available for inspection by the sheriff, and prohibited transactions with juveniles. The court held the term escort was too vague and the ordinance as a whole was overly broad, as the court noted that dance instructors, golf and tennis pros, social secretaries, and chauffeurs could be considered escorts.[143]

F. Dealing with Preexisting Sexually Oriented Businesses: Amortization

In the context of adult business regulations, amortization periods upheld by the courts include: ninety days,[146] one hundred twenty days,[147] six months,[148] one year,[149] two years,[150] three years,[151] and five years.[152] Care should be taken to make an analysis of the reasonableness of each specific amortization proposal rather than simply adopting a time period that has been approved in a different jurisdiction. If the application of an amortization provision does not allow adult businesses forced to close or relocate an adequate opportunity to recoup their investment, the amortization provision may be invalidated.[153]

IV. Regulating the Operation of Sexually Oriented Businesses

In order to reduce exposure to minors and protect surrounding businesses, ordinances may require the windows of sexually oriented establishments to be opaque and limit exterior advertising.[154] However, a total ban on all outside advertising has been invalidated as too broad.[155] In order to reduce disease and illegal activity, many ordinances require individual viewing booths to be open and constantly visible to the business operator.[156] Other specific restrictions upheld by the courts include requiring dancers to be physically separate from the patrons,[157] limiting the hours of operation of adult businesses,[158] requiring adult materials to be in sealed wrappers with any sexually explicit covers being opaquely covered,[159] and requiring employees of massage parlors to remain fully clothed at all times.[160]

Another management technique frequently used by local governments is a licensing requirement for owners and employees of adult establishments. These requirements address the very important issues of how the adult business is operated and managed as opposed to where it is located. They differ from zoning requirements, which apply to the physical property involved irrespective of the owners or operators, in that they focus management attention on the operators. However, as with zoning requirements, there are constitutional restrictions on licensing of sexually oriented businesses. Any such license requirement that can effectively serve as a prior restraint on protected First Amendment speech must have clear and definite standards for decisions and must have adequate procedural safeguards to ensure a prompt decision on license applications.[161]

Licensing standards that have been invalidated as too broad include a requirement that the operator be “of good moral character,”[162] that operators be local residents,[163] that the business be operated “in a peaceful and law-abiding manner,”[164] and that the use not be detrimental to the neighborhood.[165] Examples of standards that have been upheld include that the adult use not unreasonably increase pedestrian traffic, noise, or disruptive conduct.[166] It is permissible to require disclosure of the names of the owners, operators, and employees of adult establishments in order to check criminal records and the like.[167] However, requirements for disclosure of past aliases have been invalidated, as have requirements to disclose shareholders that have no responsibility for operation of the business.[168] It is not permissible to require a log be kept of the names of customers as this would unduly impinge on rights of association.[169] Also, any regulatory fees charged must be reasonably related to the costs of administering and enforcing this particular ordinance. For example, a Seattle licensing fee that generated $86,715 revenue in a year where the cost of administering the licensing program was $2,040 was invalidated as unreasonable.[170]

As for the timeliness of decisions, the regulatory scheme must provide for a brief review of permit applications and must make provision for prompt judicial review[171] of any denials. The Fourth Circuit Court of Appeals recently invalidated an ordinance that allowed up to 150 days to make an initial decision on an application for an adult business license, with a period of at least 103 days for a subsequent judicial review, ruling that this was not a “brief period” for decisions on applications nor did it provide the requisite “prompt judicial review.[172] Other courts have allowed review periods for adult business licenses ranging from sixty to ninety days.[173] These provisions likely do not impose any special time constraints on routine times for review of content neutral land use applications.[174] For example, it is permissible to process a special use permit review for an adult bookstore in the same time period required to process a special use permit for a similar commercial use.

V. Conclusions

A local government concerned about the impacts of sexually oriented businesses can do several things. Exhibition of obscenity and indecent exposure—as well as other criminal sexual activity such as prostitution—are crimes and have been totally banned by the state. Zoning restrictions on sexually oriented businesses can be adopted to minimize the adverse effects these uses may have on surrounding neighborhoods. These businesses can be limited to certain zoning districts and be kept a reasonable distance away from residential areas, places of assembly, and other sensitive land uses. Local governments can require premises for adult uses to be separated from one another so as to prevent an unwholesome concentration of adult businesses. Reasonable regulations can also be adopted to govern the operation of adult businesses to reduce the potential for criminal activity and assure responsible operation.

To successfully defend potential challenges to regulations restricting the location of sexually oriented businesses, a local government must establish a proper foundation for its regulations. The local government should document that the purpose of the regulation is to prevent secondary impacts. The regulating ordinance itself should include a specific statement of purpose regarding minimizing harmful secondary impacts of sexually oriented businesses. The local government should conduct a specific study of what these secondary impacts are and how the proposed restriction will reduce them. While studies and reports from other locations should certainly be considered, care should be taken to make sure the other studies are indeed relevant and helpful in determining just what local action is warranted. A small town in North Carolina enacting a regulation affecting a video store in a shopping mall where 5 percent of the store’s fare is in a back room devoted to adult films should not rely on a twenty-five-year-old study of the impacts on urban neighborhoods in Detroit or Seattle of a concentration of multiple adult bookstores and theaters. Such a tenuously related study not only provides little legal justification for the regulation, it likely provides scant practical guidance as to what is actually needed to help the community solve its problems. Finally, the local government should conduct an analysis that shows some practical (though not necessarily profitable) alternative space still exists in the community where legal adult businesses can be conducted.

If these steps are carefully followed, reasonable regulations can be adopted and enforced that balance the free speech rights of businesses and individual consumers with a community’s legitimate interest in protecting its neighborhoods.

Appendix B: Sample North Carolina Local Regulations on Sexually Oriented Business Location

Appendix C: Zoning Text Provisions on Sexually Oriented Businesses From Selected N.C. Ordinances