[BUG] CLAUDE_CONFIG_DIR not honored - Critical data separation issue

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?

Critical: CLAUDE_CONFIG_DIR environment variable not honored - causes data mixing between accounts

## Summary
Claude Code and agents ignore the CLAUDE_CONFIG_DIR environment variable and default to ~/.claude/, causing configuration and
potentially sensitive data to leak between multiple user accounts on the same machine.

## Severity
Critical - Data separation/security issue affecting job security

## Environment

• Multiple user accounts on same machine with different CLAUDE_CONFIG_DIR settings
• Claude Code version: 2.1.220
• Platform: macOS
• Affects: Work and personal account separation

## Issue Description
When CLAUDE_CONFIG_DIR environment variable is set to a custom path (e.g., $HOME/workspace/claude/rachel for personal, different path
for work account), Claude Code still:

• Reads configuration from ~/.claude/ instead of the specified CLAUDE_CONFIG_DIR
• Creates new configuration files in ~/.claude/ instead of $CLAUDE_CONFIG_DIR
• Agents (statusline-setup, etc.) bypass the environment variable and default to ~/.claude/

This happens repeatedly across different tasks and operations, not just isolated to one feature.

## Real-World Impact

• Work account configuration gets mixed with personal account configuration
• Potential exposure of work config/settings in personal account
• Risk to job security due to contamination between work and personal environments
• Users with multiple accounts on same machine cannot safely use both accounts

## Example

1. Set CLAUDE_CONFIG_DIR=$HOME/workspace/claude/work for work account
2. Request Claude to modify settings or perform tasks
3. Configuration is read/written to ~/.claude/ instead
4. Next user (personal account) with CLAUDE_CONFIG_DIR=$HOME/workspace/claude/personal inherits contaminated config from work account

## Expected Behavior

• Claude Code must always respect CLAUDE_CONFIG_DIR environment variable when set
• All configuration read/write operations must use the directory specified by CLAUDE_CONFIG_DIR
• Agents must inherit and respect this environment variable

## Actual Behavior

• CLAUDE_CONFIG_DIR is consistently ignored
• ~/.claude/ is used as default regardless of environment variable
• All accounts on same machine share the same ~/.claude/ directory, defeating the purpose of separate config directories

## Workaround
None currently available. Users with multiple accounts must not use the same machine for both accounts simultaneously, or risk data
contamination.

## Files/Code Affected

• Core config initialization logic that defaults to ~/.claude/
• Agent initialization that doesn't inherit CLAUDE_CONFIG_DIR
• StatusLine-setup agent and other agents that bypass environment variable

This is a critical security and data separation issue that requires immediate attention.

What Should Happen?

• Claude Code must always respect CLAUDE_CONFIG_DIR environment variable when set
• All configuration read/write operations must use the directory specified by CLAUDE_CONFIG_DIR
• Agents must inherit and respect this environment variable

Error Messages/Logs

Steps to Reproduce

1. Set CLAUDE_CONFIG_DIR=$HOME/workspace/claude/work for work account
2. Request Claude to modify settings or perform tasks
3. Configuration is read/written to ~/.claude/ instead
4. Next user (personal account) with CLAUDE_CONFIG_DIR=$HOME/workspace/claude/personal inherits contaminated config from work account

Claude Model

Not sure / Multiple models

Is this a regression?

No, this never worked

Last Working Version

_No response_

Claude Code Version

2.1.220

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_