Trump Housing Order Could Mean New Barriers to Federal Funding for Cities

President Donald Trump’s executive order to remove regulatory barriers to affordable home construction could affect federal funding for cities and states that don’t follow what the order calls “regulatory best practices,” including faster permitting, fewer green building mandates and relaxed limits on exurban development, an environmental attorney said.

The order, issued March 13, directs multiple federal agencies to roll back or loosen environmental, infrastructure and financing regulations that the administration argues increase the cost and slow the pace of single-family and manufactured housing. It also instructs the Housing and Urban Development secretary and the assistant to the president for domestic policy to develop state and local “best practices” that promote housing construction and affordability. These include capping permitting timelines and fees, allowing by-right development for single-family homes, curtailing “green-energy building requirements” and removing “arbitrary” limitations on housing development such as urban growth boundaries.

To this end, the Council on Environmental Quality is tasked with providing guidance on implementing categorical exclusions to regulations created under the National Environmental Policy Act, which requires federal agencies to review the environmental impact of federal permitting and funding. Trump rescinded NEPA’s implementing regulations — the binding, government-wide standard for NEPA reviews — in a January executive order.

The affordable housing order also directs the HUD, Agriculture and Transportation secretaries, as well as the Environmental Protection Agency administrator, to revise “regulations, guidance, grant applications and requirements, technical assistance, and other relevant agency documents or practices” to advance the state and local best practices.

“The federal government can scrap all the federal regulations they want to, but a lot of states have independent state-level obligations to address these issues,” said Emily Lamond, an environmental attorney with Cole Schotz. She’s concerned about “the extent to which those agencies might make grants and technical assistance contingent on the ‘best practices’ that they develop.”

“What remains to be seen is what happens once these best practices are issued and how states and local governments respond — and then how the federal government responds,” said Amy Turner, director of the Cities Climate Law Initiative at the Sabin Center for Climate Change Law at Columbia Law School.

While most parties agree “that some level of regulatory streamlining is important to help facilitate new housing,” Turner said, it needs to be done in a way that protects environmental resources. “We don’t know from the text of this executive order how far some of these things will go in that regard,” she said. “They could do it in a way that is still protective of environmental resources, or they could do it in a way that isn’t. And state and local governments are very much at the mercy of federal law in that way.”

Turner is concerned that the order’s call for federal agencies to reform or eliminate “unduly burdensome or costly energy-efficiency, water-use, or alternative energy requirements” for housing pits clean energy and energy efficiency “against the real need to build more housing,” she said. “Those things simply aren’t at odds.”

Local officials should also pay attention to the section regarding land use and urban growth boundaries, which Turner said “have really important functions, like protecting natural areas, facilitating the planning of services like water and other utilities, and encouraging some level of density — which is good from a climate perspective.”

The order’s “undue focus” on single-family housing is also troubling, Turner said. “Multifamily housing is a really important tool that local governments have to reduce greenhouse gas emissions” because it is denser, can be more easily located near transit hubs and work places, and tends to be more energy-efficient because of shared walls and floors, she said.

Lamond predicted local governments and environmental groups will take legal action invoking the Administrative Procedure Act, which governs federal rulemaking, if the order results in regulatory changes.

Cities can’t formally protest the order until the directives become proposed rules with notice and comment periods, Turner said.

“I certainly encourage city-level officials and governmental trade associations to review and comment” once that happens, Lamond said. “Because that’s initially where the rubber is going to hit the road.”

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