What is a 'Sunset Provision'

A sunset provision is a clause in a statute, regulation or similar piece of legislation that provides for an automatic repeal of the entire or sections of a law once a specific date is reached. Once the sunset provision date is reached, the pieces of legislation mentioned in the clause are rendered void. If the government wishes to extend the length of time for which the law in question will be in effect, it can push back the sunset provision date any time before it is reached.

BREAKING DOWN 'Sunset Provision'

The purpose of a sunset provision is generally to allow lawmakers to institute a law when change or government action is required reasonably quickly, when the long-term ramifications of the law in question are difficult or impossible to foresee, or when circumstances warrant such a legal structure.

A good example of legislation warranting a sunset provision is the U.S.A. Patriot Act. Intended to address relatively short-term security concerns following the events of September 11, 2001, the act, when it was initially drafted, included a sunset provision for December 31, 2005.

Often, a law with a sunset provision can get votes because lawmakers who might otherwise oppose permanent implementation of the law may be okay with a temporary implementation due to special circumstances.

RELATED TERMS
  1. Sunrise Provision

    A sunrise provision is a provision that extends coverage to events ...
  2. General Provisions

    General provisions are balance sheet items representing funds ...
  3. Severability

    A severability clause states that the terms of a contract are ...
  4. Gate Provision

    A gate provisions is a restriction placed on a hedge fund limiting ...
  5. Uniform Individual Accident and ...

    The Uniform Individual Accident and Sickness Policy Provisions ...
  6. Unilateral Extended Reporting Period ...

    A unilateral extended reporting period provision allows the insured ...
Related Articles
  1. Investing

    Banks Helped By Lower Loan Loss Provisions

    Many banks saw improved credit quality in the first quarter of 2011 leading to lower loan loss provisions.
  2. Taxes

    Trump Signs Tax Reform Bill

    The president signed the GOP's overhaul of the federal tax code into law.
  3. Personal Finance

    Why Your Will Needs a 'Titanic Clause'

    If you don't have a Titanic clause in your will and disaster strikes, there's no guarantee that your intended beneficiaries will inherit your assets.
  4. Insurance

    The Tax Implications of Fully Repealing the ACA

    Repealing the Affordable Care Act would have a financial effect on individuals and employers.
  5. Insurance

    Life Insurance Clauses Determine Your Coverage

    Understanding these key parts of your policy will help you to ensure that your family will be covered.
  6. Financial Advisor

    Succeeding At The Series 63 Exam

    Your career as a securities agent begins with this test. We'll show you how to score high.
  7. Financial Advisor

    The Impact of 2015 Tax Extender Bill on Savers

    The passage of the PATH legislation at the end of 2015 gives advisors more clarity on how to help clients with tax and financial planning.
  8. Personal Finance

    Career advice: Accounting versus law

    Identify the key differences between working in accounting and working in law and understand which specific skills make you better-suited for each career.
  9. Trading

    Warrants: A Risky But High-Return Investment Tool

    Discover the advantages and disadvantages of warrants, a largely unexploited investment vehicle.
  10. Investing

    Trump Presidency Ushers In the End of Obamacare

    With Trump slated to take the office, Obamacare is set to get repealed and replaced soon.
RELATED FAQS
  1. What major laws regulating financial institutions were created in response to the ...

    Read about the major federal responses to the financial crisis of 2008, such as the Dodd-Frank Wall Street Reform Act and ... Read Answer >>
  2. A corporate bond I own has just been called by the issuer. How can a company legally ...

    Bond issues can contain what is referred to as a call provision, which is a right afforded to the issuing company enabling ... Read Answer >>
  3. What Is an Evergreen Provision?

    An evergreen provision grants equity allotments to certain employees on a regular basis. Read Answer >>
  4. What are some examples of inelastic goods and services that are not affected by the ...

    Find out how the laws of supply and demand function for goods and services considered highly inelastic, including goods not ... Read Answer >>
Trading Center