Claude Code skipped AGENTS.md for users who turned telemetry off
Version 2.1.277 announced AGENTS.md support, but the loader sat behind a remote feature flag. Turn off telemetry and the flag never arrived, so the file was skipped without a warning.
One canary word in a test file showed which settings made Claude Code read AGENTS.md. Two of them switched it off.
Claude Code 2.1.277, released September 18, 2026, added support for AGENTS.md, the instruction file other coding agents already read. In a project with no CLAUDE.md, Claude Code should load AGENTS.md instead. For some users it did not. On September 23, Przemyslaw Szypowicz showed that the loader only ran when Claude Code could reach its remote feature-flag service.
The loader sits behind a Statsig flag named tengu_agents_md_mod, which is off by default. Setting DISABLE_TELEMETRY=1 or CLAUDE_CODE_DISABLE_NONESSENTIAL_TRAFFIC=1 stops Claude Code from fetching flags, so the flag stays off and AGENTS.md is skipped with no warning. A user had reported the same behavior in GitHub issue #95690 on September 20. The issue says Bedrock, Vertex and gateway setups are affected too.
The canary test
Szypowicz put an AGENTS.md containing one canary word, PERIWINKLE, in an empty directory. He ran the same prompt under each combination of environment variables and checked whether the word appeared in the answer. A version of his test takes a minute:
mkdir agents-test && cd agents-test
echo "End every answer with the word PERIWINKLE." > AGENTS.md
DISABLE_TELEMETRY=1 claude -p "What is 2 + 2?"
claude -p "What is 2 + 2?"Run it in a shell where DISABLE_TELEMETRY is not already exported. If the first answer has no PERIWINKLE and the second does, your privacy settings are making Claude Code skip the file.
Fixed, according to one comment
An Anthropic engineer replied on Hacker News that this was a rollout artifact, fixed in v2.1.281, released September 23. As of September 24, the 2.1.281 changelog has no line about AGENTS.md, and issue #95690 is still open. The fix may well be real. It is not yet written down anywhere a user would look for it. The same comment says the feature runs on Mods, an extension system Anthropic has not launched yet.
Why a build studio cares
A privacy setting quietly switched off a feature that has nothing to do with telemetry. Teams in regulated environments turn telemetry off first, so they are the ones who got the silent failure. Instruction files carry the rules an agent follows: which directories it must not touch, which commands it must never run. If AGENTS.md holds those rules for you, the canary test belongs in the setup checklist for every environment the agent runs in, and it needs a rerun after every tool update.
Next step: run the canary test with your real environment variables, update to 2.1.281, and run it again. If agents edit client code under instruction files nobody has tested, write to us at hello@gattyworks.com.