A new executive order from Donald Trump aimed at boosting affordable housing supply could introduce new hurdles for cities seeking federal funding, particularly if they fail to adopt certain regulatory changes.
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Issued on March 13, the order directs federal agencies to reduce or eliminate regulations that the administration argues are slowing housing development and driving up costs. These include environmental reviews, infrastructure requirements and financing rules tied to residential construction.
Under the directive, cities and states may need to align with what the administration calls “regulatory best practices” to remain eligible for federal support. These include faster permitting timelines, fewer green building mandates and relaxed restrictions on exurban development.
The order also instructs agencies such as the Department of Housing and Urban Development, Department of Transportation and Environmental Protection Agency to revise grant requirements, policies and technical assistance programs to reflect these priorities.
A key component involves changes tied to the National Environmental Policy Act, commonly known as NEPA. The Council on Environmental Quality has been tasked with issuing guidance on categorical exclusions, which could allow certain projects to bypass detailed environmental reviews. The move follows a previous rollback of NEPA’s implementing regulations earlier this year.
Legal experts say the implications could be significant for local governments.
“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.”
While many industry stakeholders agree that some regulatory streamlining could help accelerate housing construction, experts caution that the approach may create conflicts with environmental and climate priorities.
“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.
Turner noted that the order could force cities into difficult trade-offs. “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.”
She also warned that scaling back energy-efficiency and sustainability requirements could frame environmental goals as competing with housing development.
“Those things simply aren’t at odds,” Turner said, emphasizing that efficient and sustainable housing can coexist with affordability goals.
Beyond environmental concerns, the order’s emphasis on single-family housing has raised additional questions. Turner pointed out that multifamily housing plays a critical role in reducing emissions, supporting transit-oriented development and improving energy efficiency.
Meanwhile, land-use provisions in the order—such as loosening urban growth boundaries—could have far-reaching implications for infrastructure planning, natural resource protection and urban density.
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As federal agencies begin translating the executive order into formal rules and guidance, legal challenges are likely to follow. Lamond suggested that state and local governments, along with environmental groups, may invoke the Administrative Procedure Act to contest changes they view as overreach.
However, cities will have to wait until proposed rules are formally issued before they can submit comments or mount legal opposition.
“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.”
The order arrives at a time when the U.S. housing market continues to struggle with affordability, supply shortages and rising construction costs. Policymakers across the political spectrum have debated how to accelerate development without undermining environmental safeguards or long-term planning goals.
If implemented aggressively, the policy could shift how cities approach zoning, permitting and sustainability standards—especially those heavily reliant on federal grants for infrastructure, transportation and housing programs.
At the same time, the directive may deepen ongoing tensions between federal housing goals and local control over land use, setting the stage for regulatory battles that could shape development patterns for years to come.
Originally reported by Robyn Griggs Lawrence, Editor in Smart Cities Dive.
