Inconsistent environment variable resolution

[Kolyunya]

Description of the issue

Context information (for bug reports)

Output of docker-compose version

docker-compose version 1.29.2, build unknown
docker-py version: 4.4.4
CPython version: 3.9.2
OpenSSL version: OpenSSL 1.1.1k  25 Mar 2021

Output of docker version

Client:
 Version:           20.10.5
 API version:       1.41
 Go version:        go1.16
 Git commit:        55c4c88966
 Built:             Wed Mar  3 16:51:54 2021
 OS/Arch:           linux/amd64
 Context:           default
 Experimental:      true

Server:
 Engine:
  Version:          20.10.5
  API version:      1.41 (minimum version 1.12)
  Go version:       go1.16
  Git commit:       363e9a88a1
  Built:            Wed Mar  3 16:51:28 2021
  OS/Arch:          linux/amd64
  Experimental:     false
 containerd:
  Version:          v1.4.4
  GitCommit:        05f951a3781f4f2c1911b05e61c160e9c30eaa8e.m
 runc:
  Version:          1.0.0-rc93
  GitCommit:        12644e614e25b05da6fd08a38ffa0cfe1903fdec
 docker-init:
  Version:          0.19.0
  GitCommit:        de40ad0

Steps to reproduce the issue

1. Create .env file file with the following contents:

COMPOSE_PROJECT_NAME=default
APPLICATION_NAME=${COMPOSE_PROJECT_NAME}

2. Create docker-compose.yml file with the following contents:

version: "3.3"
services:
    project-name:
        container_name: ${COMPOSE_PROJECT_NAME}-nginx
        image: nginx:latest
    application-name:
        container_name: ${APPLICATION_NAME}-nginx
        image: nginx:latest

3. Run COMPOSE_PROJECT_NAME=custom docker-compose config

Observed result

services:
  application-name:
    container_name: default-nginx
    image: nginx:latest
  project-name:
    container_name: custom-nginx
    image: nginx:latest
version: '3.3'

Expected result

services:
  application-name:
    container_name: custom-nginx
    image: nginx:latest
  project-name:
    container_name: custom-nginx
    image: nginx:latest
version: '3.3'

Additional information

Here we see that ${COMPOSE_PROJECT_NAME} inside the docker-compose.yml file is taken from the environment and overrides the value provided in the .env file.

The problem is that ${COMPOSE_PROJECT_NAME} inside the .env file is not taken from the environment which is inconsistent.

This looks like a bug to me. I think that variable resolution should work identically inside .env and docker-compose.yaml files.

At a very least it should be documented somewhere. I couldn't find any documentation on how variables are resolved inside the .env file.

[stale]

This issue has been automatically marked as stale because it has not had recent activity. It will be closed if no further activity occurs. Thank you for your contributions.

[stale]

This issue has been automatically closed because it had not recent activity during the stale period.