Opinion ID: 1168260
Heading Depth: 1
Heading Rank: 11

Heading: equal protection and rational basis test

Text: The requirements of the Paulson rational basis test are fully satisfied by the security deposit rule. The rule applies alike to all members within the designated class; there are reasonable grounds for distinguishing those within the class from those outside the class; and the classification has a rational relationship to the purposes of the rule. See Convention Center Coalition, at 378-79. The security deposit rule applies alike to all ITC's defined in WAC 480-120-021. The minimum financial criteria required by the rule are reasonable and relate directly to liquidity of a business, which is a crucial factor in its ability to pay its bills. Any ITC meeting the minimum financial criteria of the rule need not post a deposit. Any ITC that cannot meet the minimum financial criteria of the rule can post a deposit, furnish security, or prepay 1 month's billing. It is not sufficient for a constitutional claim merely to assert or show that some ITC's cannot meet the minimum financial requirements. AmNet contended that the Commission failed to show that ITC's have higher default rates and generate more bills (or more unpaid bills) than all other businesses as a class and that the security deposit rule singles out a class of Pacific Northwest Bell's own competitors, forcing some of them out of business. There are reasonable grounds for distinguishing those within the class of ITC's from those outside the class. The Commission has a legitimate function in regulating the relationship between ITC's and LEC's. ITC's are unique business entities. They constitute the wholesale market for purchase of telecommunications services from local exchange companies. For non-ITC customers of LEC's, telecommunications services are an overhead item, but for ITC's those services are their raw material, and can constitute a large portion of their total cost of doing business. ITC's can incur significant charges in a short period of time. In addition, assets of ITC's are often fully secured, with little or no assets available to satisfy unpaid bills. The classification has a rational relationship to the purposes of the rule. The unique characteristics of ITC's clearly relate to creditworthiness and rationally relate to the type of protection afforded by the deposit rule. The principal question is: who should bear the risk of ITC defaults? Under the existing deposit rule (refund of deposit after 12 months of payment without delinquency), LEC's and their ratepayers bear the risk passed on in rate increases. The Commission agreed with Pacific Northwest Bell that since ITC's stand to profit from the financial enterprises posing ITC default risks to LEC's, ITC's should bear the risk. The weighing of policy objectives is within the province of the Commission. The statutory policies of preserving universal service and ensuring that customers pay reasonable charges for service are legitimate policy goals. RCW 80.36.300(1), (3). While some ITC's would weigh policy objectives differently, this does not mean the deposit rule is unconstitutional. The rational basis test requires that the challenger do more than merely challenge the wisdom and expediency of the statute. Brewer v. Copeland, 86 Wn.2d 58, 61, 542 P.2d 445 (1975). It must be shown conclusively that the classification is contrary to the legislation's purposes. Yakima Cy. Deputy Sheriff's Ass'n v. Board of Comm'rs, supra, at 836. The classification must be purely arbitrary to overcome the strong presumption of constitutionality applicable here. Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78, 55 L.Ed. 369, 31 S.Ct. 337, 340 (1911).