[BUG] CLAUDE_CODE_ADDITIONAL_DIRECTORIES_CLAUDE_MD not loading CLAUDE.md if additionalDirectories is specified in settings.json

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

When I setup CLAUDE_CODE_ADDITIONAL_DIRECTORIES_CLAUDE_MD env and additionalDirectories in settings.json like this:
"additionalDirectories": [
"../raptor-ui"
],
"env": {
"CLAUDE_CODE_ADDITIONAL_DIRECTORIES_CLAUDE_MD": "1"
}

Claude Code doesn't seem to load the CLAUDE.MD from the additional directory. If I pass the --add-dir argument , then the CLAUDE.MD from the additional directory is loaded.

What Should Happen?

The CLAUDE.MD should load from additional directory when the CLAUDE_CODE_ADDITIONAL_DIRECTORIES_CLAUDE_MD and additionalDirectories are specified in settings.json

Error Messages/Logs

No error message

Steps to Reproduce

Set up settings.json with additionalDirectories and the define the CLAUDE_CODE_ADDITIONAL_DIRECTORIES_CLAUDE_MD: 1 in the env section.

Claude Model

Opus

Is this a regression?

No, this never worked

Last Working Version

_No response_

Claude Code Version

2.1.27

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_