Legal Definitions - public-convenience-and-necessity standard

The public-convenience-and-necessity standard is a fundamental legal test used by government agencies and regulatory bodies to determine whether a proposed project, service, or business operation should be authorized or approved. It requires the agency to assess if the proposed action would genuinely serve the best interests of the general public by either making their lives easier or more efficient (convenience) or by fulfilling an essential need that is currently unmet or inadequately addressed (necessity).

Here are some examples illustrating how this standard is applied:

• Example 1: New Public Transportation Route

  A city's public transit authority receives a proposal to establish a new bus route connecting a rapidly developing residential neighborhood with the downtown business district and a major hospital. Before approving the route, the authority would apply the public-convenience-and-necessity standard. They would consider if residents in the new neighborhood lack adequate transportation options to essential services and employment (necessity) and if the new route would significantly reduce commute times or provide a more reliable travel option for a substantial number of people (convenience). If these factors are met, the route would likely be approved.

• Example 2: Granting a License for a New Utility Provider

  A state's public utility commission is reviewing an application from a new telecommunications company seeking to provide high-speed internet services to several rural communities. The commission would use the public-convenience-and-necessity standard to evaluate the application. They would investigate whether the existing internet services in those communities are slow, unreliable, or nonexistent, indicating an unmet need (necessity). They would also assess if the new company's proposed service offers superior speeds, lower prices, or more comprehensive coverage, thereby enhancing the overall quality of life and economic opportunities for residents (convenience). If the new service demonstrably improves upon existing options or fills a critical gap, it would meet the standard.

• Example 3: Approving a New Airport Expansion

  A federal aviation administration is considering a major expansion project for a regional airport, including adding new runways and terminal gates. The project proponents must demonstrate that the expansion meets the public-convenience-and-necessity standard. The administration would analyze if the current airport capacity is insufficient to handle growing passenger demand or cargo traffic, leading to frequent delays or limited flight options (necessity). They would also evaluate if the expansion would create more direct routes, reduce travel times, stimulate local economic growth, and improve the overall efficiency and accessibility of air travel for the region's population and businesses (convenience). If the benefits to the public outweigh potential drawbacks, the expansion would likely be approved.