Legal Definitions - certificate of public convenience and necessity

A Certificate of Public Convenience and Necessity is a special permit issued by a government regulatory agency that authorizes a company to provide a specific service to the public. This certificate is typically required for industries that are heavily regulated, such as utilities, transportation, and telecommunications, where the government aims to ensure essential services are provided reliably and efficiently, often to prevent over-competition or ensure service in underserved areas.

To obtain this certificate, a company must demonstrate two key things: first, that there is a genuine public convenience or need for the proposed service, and second, that the service is a necessity, meaning it will serve the public good, and the applicant is capable of providing it safely, effectively, and without undue harm to existing services or the environment.

• Example 1: New Inter-City Bus Service
  A transportation company, "Route Connect," wants to start a new bus service connecting two growing cities, Springfield and Shelbyville, which currently lack direct public transportation options.
  Explanation: Route Connect would need to apply for a Certificate of Public Convenience and Necessity from the relevant state transportation authority. They would have to demonstrate that there's a clear public need (convenience) for this direct route, perhaps by showing increased commuter traffic, student populations, or elderly residents needing affordable travel between the cities. They would also need to prove their operational necessity, showing they have safe buses, qualified drivers, a viable business plan, and the financial stability to provide reliable service without negatively impacting existing transportation infrastructure or causing excessive traffic congestion.
• Example 2: Natural Gas Pipeline Expansion
  A utility company, "EnergyFlow Inc.," proposes to build a new natural gas pipeline segment to deliver fuel to a rapidly developing industrial park and several new residential communities in a previously underserved rural region.
  Explanation: EnergyFlow Inc. would require a Certificate of Public Convenience and Necessity from a federal or state energy regulatory commission. They would need to demonstrate the public convenience by showing the growing demand for natural gas in the new industrial park and residential areas. The necessity aspect would involve proving that the pipeline is the most efficient and safest way to meet this demand, that the company has the technical expertise and financial resources to construct and operate it responsibly, and that the environmental impact has been thoroughly assessed and mitigated.
• Example 3: Rural Broadband Internet Provider
  "Digital Frontier," a new internet service provider, wants to lay fiber optic cables and establish broadband internet service in several remote rural communities that currently have very limited or no high-speed internet access.
  Explanation: Digital Frontier would likely need a Certificate of Public Convenience and Necessity from a state public utility commission. They would argue for public convenience by highlighting the lack of existing high-speed internet options and the critical need for reliable connectivity for education, healthcare, and economic development in these rural areas. The necessity would involve demonstrating their technical capability to build and maintain the infrastructure, their financial stability, and their commitment to providing affordable and reliable service, thereby serving the public good where market forces alone have failed to provide adequate service.