BackMaking laws with sunset clauses
By allowing specific time periods for the operation of laws, this tool could allow policymakers to push for new ideas to be implemented with limited downside
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When Hercules cleaned up the Augean stables overnight, he did so by creating a trench between two rivers to flush them out. We don’t know whether the trenches were retained after he went away; if they weren’t, they would have quickly realized the limitations of using one-time fixes to solve difficult problems. Whether to tackle stock or flow is, after all, a classic dilemma.
The government’s (both Union and state) efforts at repealing outdated laws has been in the news. While one can understand the tremendous effort required to initiate this one-time effort to fix what has accumulated over the decades, I argue that the momentum should also be used to put in place necessary measures to avoid such a situation from recurring. Otherwise, we would be faced with the need for another clean-up some years down the line.
One of the policy tools that must be used to tackle this problem is “sunset clause" or “periodic review". In essence, such clauses require that certain provisions or laws will cease to be effective from a predetermined date unless they are reauthorized. Such a policy measure could help in tackling legislative inertia that leads to accumulation of unwanted laws over years.
Sunset clauses have been frequently used in India in fiscal and tax laws, e.g., tax holidays and exchange control regulations. The Constitution itself provides for a 10 year sunset for reservations to Parliament and legislative assembly seats (Article 334). Such provisions are an admission by the lawmakers that the law is not made for eternity and a recognition that circumstances change over time—whether it be one year or five years. There is a need to extend this learning to other areas of law by admitting that social circumstances and institutional behaviour (like economic situations) do also change over time with the consequent need to revisit the laws. As laws have become more and more specific, there is a greater need to have a mechanism in place to check both how the law has performed in handling the situation and, whether and how, the circumstances around that situation have changed.
Sunset clauses have been widely used in the US, the UK and Germany for more than 20 years now. In fact, Thomas Jefferson, one of the founding fathers of the US, had suggested to James Madison, a fellow founding father, that the US constitution be terminated after 19 years so as to not burden the future generations with the past. And there is much to learn for us from their experience to make this a success here. This policy tool has taken three forms over the years during implementation:
(i) sunset clauses: clauses specific to certain provisions or laws which mandate that the law will lapse after a date;
(ii) reauthorization: clauses that mandate review and renewal of the law after passage of a certain time period; and
(iii) sunset laws: an omnibus law that provides for an expiry date for other laws.
Each of these measures have different applications suiting varying policy needs and there is no one size fits all.
An understanding of international experience could help us in this critical stage. Sofia Ranchordás has a good summary of the international experience in her thesis, Sunset clauses and experimental legislation: Blessing or curse for innovation (2014). While this tool has been around for more than 20 years, it has seen mixed results in practice and certain enabling conditions have been identified as necessary to making this a success. While lawmakers in the US do routinely approve extensions of laws, they do so only after extensive studies are brought on record. However, the efficacy of this tool in countering capture by interest groups of the law-making process has been seen to be limited in the US.
The lawmaking process and capacity in India is under strain due to the dynamics of the economy and society. A recent example is the amendment to the Companies Act made a few weeks back. Notice the differences between the recommendations of the Parliamentary Standing Committee and the Bill as put to vote. Without going into the merits of the final amendments, it is worth noting how we do not have any visibility on why certain recommendations were accepted and why others were dropped. Policymakers in India are only now realizing the importance of evidence-based policymaking. Periodic review of laws requires discussion about efficacy of solutions and nature of problems, thus fostering evidence-based policymaking and allowing some light to shine on this process.
By allowing specific time periods for the operation of laws, this tool could allow policymakers to push for new ideas to be implemented with limited downside. Similarly, those opposing the changes should insist on including such a clause to ensure evaluation of policy intervention. This requires an admission that modern law making is experimental in nature and requires validation by results. This assumes even more importance in the Indian context where the parties in power could swing widely, leading to either implementation of unviable electoral promises or mindless reversal of laws passed by previous government. Having a fixed tenure for review in effect may actually ensure certainty of law.
Like all other policy tools, it is the implementation that is critical to the success of this tool. The mechanics of review must be well laid out (in the law itself) so that the review process is transparent and effective. This would include factors like defining the objective of the intervention, defining the metrics that would indicate the success of the intervention, listing out the stakeholders whose inputs must necessarily be considered in the review process and the manner of taking the inputs on record.
One would do well to remember that Hercules’ efforts came to nought as King Augeas ultimately did not reward him. Cleaning our country’s Augean stables of statutes may well end up being unrewarding to society without a mechanism being put in place to prevent it from recurring.
Surya Prakash B.S. is with DAKSH, Bengaluru. These are his personal views.
Comments are welcome at theirview@livemint.com
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