Aug 20, 2019

With Pilot Programs, Cities Can Give Micromobility a Test Drive

Jennifer Huddleston Research Fellow , Trace Mitchell Research Associate

Dockless electric scooters are one of several new mobility modes sweeping across America that provide a solution to the “last mile” problem, the often difficult to cover distances between where traditional transportation like cars or buses end and where a person actually needs to get. 

The first scooter companies (like Bird and Lime) popped up overnight without asking permission or even alerting policymakers. What policy tools are available for municipalities that want to empower innovators and entrepreneurs to come up with creative solutions to transportation problems? 

Cities have implemented a variety of policy solutions when it comes to this new and sometimes disruptive transportation option. Some are thrilled with the scooters and have embraced a “permissionless innovation” approach, welcoming these companies with open arms and limited or no regulation. 

Others have taken an aggressive and precautionary approach to these devices, with some cities even going as far as to ban or impound scooters. 

Many, however, have found the middle ground and set up a “pilot program” that establishes best practices and manages the initial deployment. 

Pilot programs can be categorized as “soft law” in many cases. “Soft law” refers to a variety of sub-regulatory actions taken by policymakers to provide some form of governance without the restrictions and formality of traditional rulemaking. 

While there certainly are concerns that such a tool could be abused or lack clarity and transparency, state and federal level soft law approaches like sandboxes, agency consultations, informal guidance, and workshops have been a way to overcome existing regulatory barriers that might prevent new technologies from being deployed. 

In the transportation space, where many state and federal regulations exist, soft law has become a key tool on a federal level for autonomous vehicles.

Like many soft law tools, pilot programs vary in their specifics, including the length of program time, number of players, and requirements to participate. When well-designed, these programs are often limited in their duration and can allow policymakers, consumers, and innovators to “test drive” various regulatory elements and identify problems, while still allowing new transportation options. 

However, a poorly designed program could end up doing more harm than good by creating regulatory barriers for future transportation innovation and limiting market competition through government-granted privilege. 

So what makes a well-designed pilot program? We suggest three key factors that distinguish an innovation-enabling pilot program from a more restrictive regulatory regime.

Innovation-Enabling Pilot Programs Should Be Open to All 

An innovation-enabling pilot program should have relatively low barriers to entry and refrain from placing arbitrary limitations on the number of participants. 

Scooter pilot programs often resemble sandboxes, a form of governance for enabling new technologies in traditionally-regulated industries like financial services. Sandboxes and pilot programs relax certain regulatory requirements for new products or grant formal permission to begin operating without having to go through traditional licensing processes. 

As our Mercatus colleague Brian Knight has discussed, while a pilot program or sandbox might not be able to allow anyone to participate, it should be as accessible as possible. This will allow for more competition among participants, which is likely to result in lower prices and higher quality of service. 

Open sandboxes also send a signal to innovators that they can think beyond what already exists and develop unique solutions to a location’s transportation problems. Perhaps most importantly, they also mitigate the potential for cronyism that can occur when regulators are given broad discretion in deciding who is and is not allowed to enter a market. 

So how might this play out when it comes to scooters? Rather than follow the example of cities like San Francisco that have granted exclusive rights of operation to specific companies, policymakers might look to more innovation-friendly programs like Austin and Washington, DC that allow any company that meets the program's requirements to participate. 

Of course, some cities are concerned about the total number of deployed vehicles and worry that such devices may overrun an area. A more innovation-focused approach would address these concerns by allowing companies to deploy scooters based on the company’s average number of rides per day in the area. 

For example, Miami’s pilot program provides that companies may “increase fleet size by 25% monthly if usage rates indicate enough demand (exceeds 3 rides per scooter per day), or decrease if usage rates decline (less than 2 rides per scooter per day).” This allows multiple firms to deploy their products and expand while addressing the concerns overabundance of scooters. In fact, such an approach might also show that more scooters are needed due to high consumer usage.

Requirements for Participation Should Be Flexible and Constructed to Address Specific Harms 

Another distinguishing feature of pilot programs that create precautionary barriers for transportation innovation is that they specifically dictate design, speed, or operation conditions without a clear link to specific harms or concerns. In fact, at times these requirements could necessitate a city-specific product, minimize benefits, or even create more problems than they solve.

For example, one common requirement concerns the maximum speed at which scooters are allowed to operate. Jurisdictions often place limits on how fast scooters can go, typically in the range of 10 to 15 MPH. Yet these limits are not typically tied to specific data or behaviors and could result in riders having to make tradeoffs that also come with risk and possible disruption. 

Consider how Arlington, VA caps scooter speeds at 10 MPH, but also prohibits users from operating scooters on sidewalks. This means that users must drive their scooters on the roads or in the bike lanes, where both cars and bicycles around them are often operating at much higher speeds. 

While there may be some need for speed limits, these limitations should be reasonable and not overly restrictive. We should not undermine true public safety for the sake of perceived public safety.

Rather than setting overly-specific requirements for the design of a scooter or placing arbitrary requirements on their operations, an innovation-enabling pilot program should establish guidelines that are broad enough to allow a variety of options, but narrow enough to address necessary general norms. This could include general requirements for safety features such as a light, a noise alert like a bell, and breaks without dictating design specifics. 

Similarly, pilot programs could address the appropriate locations to ride micromobility devices, perhaps by differentiating where they could be ridden at different speeds. Finally, general requirements for parking or penalties for poorly-parked vehicles could place responsibility on specific offending parties and encourage the development of positive social norms. 

In general, these more flexible requirements could enable not only scooters, but also newer forms of micromobility like dockless mopeds without requiring the constant establishment of new programs and regulations.

Pilot Programs Should Seek to Develop Sustainable Long Term Policy, Not Continue as a Pilot Program Indefinitely

A well-structured pilot program should have a limited duration with the end goal to determine appropriate, permanent policies. One of the primary goals of a pilot program is to collect information and establish best practices for more widespread implementation. Much like sandboxes and other soft law devices, pilot programs can be a way of providing flexibility when it comes to a rapidly changing technology that may not be well served by traditional policymaking mechanisms.

Still, soft law itself can lack certainty for innovators or result in its own form of red tape and industry capture that could make continued evolution difficult. With this in mind, pilot programs for micro-mobility and other soft law tools should be used to overcome existing policy problems, but should also be considered in light of broader innovation-encouraging reform.

When it comes to scooters and pilot programs, this means an innovation-enabling program will likely terminate or evolve into a more formal approach. As our Mercatus colleague Adam Thierer has discussed regarding innovation policy more generally, a sunsetting imperative would require a frequent reexamination of existing regulation to determine if such policies are needed or are instead creating burdens that prevent evolution and further innovation. 

Most pilot programs already come with an expiration date, but forward-thinking policymakers should consider what happens when this sunset occurs. If not, they can create legal uncertainty surrounding the long-term prospects of deploying in a particular area or risk creating red tape in a different form. 

Upon their completion, an innovation-enabling pilot program should consider removing elements that are shown to be unnecessary and further expand the opportunities available to innovators and entrepreneurs. It should also find ways to formalize the elements that were shown to be necessary to prevent harm and promote consumer welfare.

Pilot programs have been one common response for municipalities to collaborate with the public to develop policy solutions that enable innovation while addressing potential problems and concerns. Still, an innovation-enabling pilot program should look to expand the possibility of deployment while addressing potential harms rather than limit the technology. Policymakers should consider whether their pilot program is serving as a policy test drive or a speed bump for transportation innovators and entrepreneurs.

Photo credit: TOBIAS SCHWARZ/AFP/Getty Images

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