diff --git a/heat/common/environment_util.py b/heat/common/environment_util.py
index eb3b8cde11..4908028303 100644
--- a/heat/common/environment_util.py
+++ b/heat/common/environment_util.py
@@ -113,24 +113,26 @@ def merge_parameters(old, new, param_schemata, strategies_in_file,
             raise exception.InvalidMergeStrategyForParam(strategy=MERGE,
                                                          param=p_key)
 
-    new_strategies = {}
-
-    if not old:
-        return new, new_strategies
-
     for key, value in new.items():
         # if key not in param_schemata ignore it
         if key in param_schemata and value is not None:
             param_merge_strategy = get_param_merge_strategy(
                 strategies_in_file, key, available_strategies)
             if key not in available_strategies:
-                new_strategies[key] = param_merge_strategy
+                available_strategies[key] = param_merge_strategy
 
             elif param_merge_strategy != available_strategies[key]:
                 raise exception.ConflictingMergeStrategyForParam(
                     strategy=param_merge_strategy,
                     param=key, env_file=env_file)
 
+    if not old:
+        return new
+
+    for key, value in new.items():
+        # if key not in param_schemata ignore it
+        if key in param_schemata and value is not None:
+            param_merge_strategy = available_strategies[key]
             if param_merge_strategy == DEEP_MERGE:
                 LOG.debug("Deep Merging Parameter: %s", key)
                 param_merge(key, value,
@@ -143,7 +145,7 @@ def merge_parameters(old, new, param_schemata, strategies_in_file,
                 LOG.debug("Overriding Parameter: %s", key)
                 old[key] = value
 
-    return old, new_strategies
+    return old
 
 
 def merge_environments(environment_files, files,
@@ -181,11 +183,10 @@ def merge_environments(environment_files, files,
             if section_value:
                 if section_key in (env_fmt.PARAMETERS,
                                    env_fmt.PARAMETER_DEFAULTS):
-                    params[section_key], new_strategies = merge_parameters(
+                    params[section_key] = merge_parameters(
                         params[section_key], section_value,
                         param_schemata, strategies_in_file,
                         available_strategies, filename)
-                    available_strategies.update(new_strategies)
                 else:
                     params[section_key] = merge_map(params[section_key],
                                                     section_value)
diff --git a/heat/tests/test_common_env_util.py b/heat/tests/test_common_env_util.py
index fca3a9b34f..07e0770987 100644
--- a/heat/tests/test_common_env_util.py
+++ b/heat/tests/test_common_env_util.py
@@ -135,7 +135,7 @@ class TestMergeEnvironments(common.HeatTestCase):
 
     def test_merge_envs_with_specified_default(self):
         merge_strategies = {'default': 'deep_merge'}
-        self.env_2['parameter_merge_strategies'] = merge_strategies
+        self.env_1['parameter_merge_strategies'] = merge_strategies
         files = {'env_1': json.dumps(self.env_1),
                  'env_2': json.dumps(self.env_2)}
         environment_files = ['env_1', 'env_2']
@@ -169,7 +169,7 @@ class TestMergeEnvironments(common.HeatTestCase):
             'lst_value2': 'merge',
             'json_value1': 'deep_merge'}
 
-        self.env_2['parameter_merge_strategies'] = merge_strategies
+        self.env_1['parameter_merge_strategies'] = merge_strategies
 
         files = {'env_1': json.dumps(self.env_1),
                  'env_2': json.dumps(self.env_2)}
@@ -207,7 +207,7 @@ class TestMergeEnvironments(common.HeatTestCase):
             'lst_value1': "deep_merge",
             'json_value1': "merge"}
 
-        self.env_2['parameter_merge_strategies'] = merge_strategies
+        self.env_1['parameter_merge_strategies'] = merge_strategies
         self.env_3['parameter_merge_strategies'] = env3_merge_strategies
 
         files = {'env_1': json.dumps(self.env_1),
@@ -231,7 +231,7 @@ class TestMergeEnvironments(common.HeatTestCase):
             'default': "overwrite",
             'lst_value2': "overwrite"}
 
-        self.env_2['parameter_merge_strategies'] = merge_strategies
+        self.env_1['parameter_merge_strategies'] = merge_strategies
         self.env_4['parameter_merge_strategies'] = env4_merge_strategies
 
         files = {'env_1': json.dumps(self.env_1),
@@ -275,9 +275,9 @@ class TestMergeEnvironments(common.HeatTestCase):
         self.assertEqual({'value1': 0}, self.params['parameter_defaults'])
 
     def test_merge_envs_with_zeros_in_maps(self):
-        env1 = {'parameter_defaults': {'value1': {'foo': 1}}}
-        env2 = {'parameter_defaults': {'value1': {'foo': 0}},
+        env1 = {'parameter_defaults': {'value1': {'foo': 1}},
                 'parameter_merge_strategies': {'value1': 'deep_merge'}}
+        env2 = {'parameter_defaults': {'value1': {'foo': 0}}}
         files = {'env_1': json.dumps(env1),
                  'env_2': json.dumps(env2)}
         environment_files = ['env_1', 'env_2']