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Dockless bike, scooter firms clash with U.S. cities over regulations

A man uses a rideshare electric scooter in San Diego last month. While some communities welcome dockless bikes and scooters, some cities were unprepared for the massive growth and the public backlash as abandoned bikes and scooters began clogging sidewalks, parks and other public spaces. (Mike Blake/Reuters)

The U.S. experiment with dockless bike and scooter sharing is at a crossroads, with operators and cities struggling to find a balance between governments’ need to regulate the services without stifling the companies’ ability to make money.

Dockless bike-sharing giant Ofo has pulled out of several major U.S. markets — including the District, Chicago and Miami — citing regulatory hurdles, while backlash has restrained the explosive growth of scooter operations in cities from San Francisco to Cambridge, Mass.

“What we are seeing around the country is a very rapidly evolving system,” Seattle City Council member Mike O’Brien said last week before the council approved one of the most comprehensive sets of regulations for the industry in the nation.

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Dockless bike systems began to pop up in the United States a year ago, growing exponentially in part thanks to the millions of dollars that investors such as Uber and Google have put into companies such as Lime, Jump Bikes and Bird.

While many communities were excited by the opportunity dockless bikes and scooters presented to expand car-free commuting options for residents, they were unprepared for the massive growth and the public backlash as abandoned bikes and scooters began littering sidewalks, parks and other public spaces. The lack of regulation also has led to increased tension among other road users — and pedestrians — over issues such as right of way and where the vehicles are permitted.

In the nation’s capital, one of the first U.S. cities to permit the dockless services, Chinese competitors Ofo and Mobike recently pulled their services, citing the District’s restrictions on fleet size and its slowness in moving the program from the pilot phase to permanent.

Many residents who have come to depend on the services are working with advocates to push D.C. regulators to reconsider their rules. They succeeded in convincing the city to abandon an unpopular plan to impose a $200-per-bike fee on operators and are now urging the city to consider lifting the cap on fleets from 400 per company to allow up to 20,000 dockless bikes in the District.

Elsewhere, cities are still trying to find the right approach. Some have banned the services, reacting to the unannounced arrival of the scooters and bikes with “cease and desist” orders.

San Francisco banned all shared e-scooters in June, forcing companies to stop operations and go through a permitting process. A Los Angeles City Council member last week called for a ban on scooters and asked the city to issue cease-and-desist letters to companies already operating there.

Meanwhile, the Seattle City Council voted to allow up to 20,000 bikes, doubling the number now available. But with the expansion, the city also adopted a plan to allow four companies to operate up to 5,000 bikes each — as long as they pay the city an annual fee of $250,000.

“Some cities are finding they regulated too much too quickly,” said Paul Lewis, vice president of policy and finance at the Eno Center for Transportation. “The bottom line is, they want more people bicycling and scootering and things that don’t involve driving a car.”

They also may find their regulations unpopular among the commuting public, he said, which studies suggest has generally positive views of the dockless services. Many residents frustrated by troubled transit systems are willing to give the services a try.

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In the District, Mobike said the 400-bike cap was too small to serve the entire city and provide reliable service. By comparison, in Milan, a service area similar in size to the District, the company operates 8,000 bikes.

“Overall, there is very good growth in other cities and other countries,” said Chris Martin, vice president of international expansion and operations at Mobike. “They have set regulation that works to make the business sustainable and help it grow.”

Ofo officials have criticized caps on fleets as shortsighted and a barrier for companies to succeed. It called Seattle’s newly approved fee “exorbitant.”

“With Ofo’s rate of $1 per ride, the updated $250,000 annual fee makes it impossible for us to effectively serve our riders,” said Lina Feng, general manager of Ofo Seattle.

Restrictions on scooter operations led San Francisco-based Spin to pull out of some cities, said Brian No, the company’s head of policy.

Experts say American cities have taken a tougher approach in regulating the services than their counterparts in Europe, where the focus has centered on addressing public space issues and vandalism and theft.

U.S. cities were among the first to implement operating fees ranging from a couple hundred dollars to tens of thousands of dollars. They also have more rigorously applied caps on fleet sizes in an effort to avoid oversupply scenarios like those in China, where images of hundreds and thousands of abandoned bikes piled atop one another have drawn criticism.

“That element has made operating in the U.S. a little more challenging for some companies,” said Dana Yanocha, senior research associate at the Institute for Transportation and Development Policy, which studies the dockless industry.

Petition calls for 20,000 dockless bikes in D.C.

As a result, dockless companies have shifted their strategy for entering U.S. markets from lobbying officials for permission to operate to showing up unannounced — similar to the way Uber and other transportation start-ups did. Their rationale: If there are no regulations prohibiting their operations, there is no harm in launching without permission.

“We won’t launch in a city if our legal analysis tells us it is illegal,” said Dave Estrada, head of government relations and policy at Bird, which is operating in more than 30 markets. The company was ordered out of Somerville and Cambridge, Mass., last week just days after launching.

“We look at city ordinances and state law, and in both cases, we don’t find that our system is illegal,” Estrada said. “What has happened in some cities is, some of them have pushed back.”

Toby Sun, chief executive of Lime, which launched on a North Carolina college campus just over a year ago and is now in more than 70 markets across four countries, said regulations are understandable, but if they are too tough, they can imperil the programs in places like the District where demand is high. Higher operational fees, he said, may result in higher costs for users who now can rent bikes for $1 for a 30-minute ride and scooters for $1 to start plus 15 cents a minute.

“It poses more challenges for us to provide affordable transportation,” he said.

Theft and destruction of dockless bikes a growing problem

Critics of the programs, however, say cities aren’t regulating enough.

“If they get their wishes and the city grants them the ability to have thousands of bikes on the sidewalks, the obstacles, the potential for tripping and injury will grow exponentially,” said Steven Richert, a personal fitness trainer in the District who works with the elderly and people with disabilities who struggle to navigate city streets. “What I would hope cities would do is to stop this program before it gets any worse. But at least begin to regulate it, which they haven’t done.”

Transportation officials and advocates for multimodal transportation options say the sidewalk problems can be remedied with regulation, education and enforcement. Studies and companies report complaints are dwindling as users learn dockless decorum, companies implement incentives and penalties for reckless usage, and the communities adjust to the new services.

What cities are likely to continue to wrestle with is finding the right regulations to govern the services, from what their ideal number of devices is to determining reasonable operational fees. And they may continue to face that question as more technologies emerge.

“These private companies aren’t going away,” Yanocha said. “It is really up to the city to be able to respond to these type of emerging technologies.”