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

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.

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.

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.”

Photo: Ian Coble for Forbes