The Salt Lake Tribune (Erin Alberty) reports:

[T]he Utah Tax Commission is considering recalling the license plate after complaints this week on social media. "We're not sure how it got through," said Tammy Kikuchi, spokeswoman for the commission, which oversees the Utah Division of Motor Vehicles. "We're really quite surprised." … [O]fficials are reviewing the plate for compliance with provisions in state law that forbid vanity plates that "may carry connotations offensive to good taste and decency or that may be misleading" and express "contempt, ridicule or superiority of a race, religion, deity, ethnic heritage or political affiliation." "I don't know why it was approved in 2015," [Kikuchi] said, adding: "The current DMV director was not the director then."

I think canceling the plate would violate the First Amendment:

[1.] Vanity plate contents are private speech, not government speech. Though Walker v. Sons of Confederate Veterans held that license plate designs are government speech, and the government can generally pick and choose which ones are allowed, vanity plates convey the owner's own views. Courts are split on the matter, with a recent Maryland high court decision and a federal district court decision in Kentucky taking the view I articulate here, and an Indiana Supreme Court decision taking the opposite view. To quote the Maryland court's analysis:

[Walker v. Texas Div., Sons of Confederate Veterans (2015)], the U.S. Supreme Court determined that a Texas-issued specialty license plate displaying a Confederate flag constituted speech by the government, not speech by the Texas Division of the Sons of Confederate Veterans, the organization that sought the plate design…. The First Amendment protects, however, private speech on government property, with some limitations. In the present case, … a message on a vanity plate … is private speech. Applying the Supreme Court's first analytical factor [from Walker], historical usage, although license plates in general function historically as government IDs for vehicles, vanity plates display additionally "a personalized message with intrinsic meaning (sometimes clear, sometimes abstruse) that is independent of mere identification and specific to the owner." The unique, personalized messages communicated via vanity plates contrast with the generic, depersonalized speech conveyed by a specialty plate: "[m]any Maryland vehicles display identical specialty plates; only the registration numbers, which on a specialty plate have no intrinsic meaning and carry no message, will vary." Additionally, private citizens, not the State of Maryland, create and submit prospective vanity plate messages. "So, historically, vehicle owners have used vanity plates to communicate their own personal messages and the State has not used vanity plates to communicate any message at all. Unlike the license plate slogans that States use 'to urge action, to promote tourism, and to tout local industries[,]' vanity plates are personal to the vehicle owner, and are perceived as such." Turning to the factor of audience perception, "[t]he personal nature of a vanity plate message makes it unlikely that members of the public, upon seeing the vanity plate, will think the message comes from the State." Unlike the specialty plates at issue in Walker, vanity plates bear unique, personalized, user-created messages that cannot be attributed reasonably to the government. The fact that this kind of speech takes place on government property—a license plate—is not transformative in this context of private speech into government speech. Indeed, the Supreme Court's public forum doctrine … exists only because of the need to analyze government restrictions of private speech that takes place on government property. Nor does the juxtaposition of private speech on government property transform the public perception of the speaker's identity…. Considering the third factor of the government speech analysis, … the [government's] statutory and regulatory authority to deny or rescind a vanity plate based on the content of its message does not rise to the level of "such tight control that the personalized messages become government speech." Maryland does not exercise "direct control" over the "alphanumeric pattern" displayed on vanity plates in the same or similar way that Texas controlled specialty plates. In Texas, the State had "sole control" over the content of a specialty plate. With respect to vanity plates in Maryland, "vehicle owners, not the State, create the proposed messages and apply for them." Although the MVA retains discretion to deny a prospective vanity message, its authority to recall vanity plates issued erroneously suggests that the MVA's control over vanity plates does not rise to the rigorous level required to transmogrify its regulatory approach into government speech. Contrarily, a recent ruling by the Indiana Supreme Court held that vanity plates constitute government speech because "[l]icense plates have long been used for government purposes" such as vehicle identification, their messages are perceived to be communicated on behalf of the State, and the State "'maintains direct control'" over the messages they display…. [W]e reject the [Indiana] court's reasoning because vanity plates represent more than an extension by degree of the government speech found on regular license plates and specialty plates. Vanity plates are, instead, fundamentally different in kind from the aforementioned plate formats. Maryland has not communicated historically to the public with vanity messages. Observers of vanity plates understand reasonably that the messages come from vehicle owners. Moreover, the MVA does not exercise control over vanity plate messages to the extent that Walker informs us Texas controlled specialty plates.

[2.] Under the First Amendment precedents, the vanity plate program is either a so-called "nonpublic forum" or a "limited public forum," so the government has some power to restrict speech there—but only in a viewpoint-neutral and reasonable way.

[3.] Matal v. Tam (the Slants case) held that excluding speech that "disparage[s] … or bring[s] … into contemp[t] or disrepute" any "persons, living or dead"—including speech perceived as racist—is viewpoint-based. Likewise, excluding speech that expresses "contempt, ridicule or superiority of a race, religion, deity, ethnic heritage or political affiliation" is viewpoint-based (even if one concludes that urging the deporting of illegal aliens is based on "race" or "ethnic heritage," rather than based on their being illegally present in the U.S.). And once we conclude that the personalized license plate program involves private speech rather than government speech (see item 1 above), such viewpoint discrimination is unconstitutional.