Claude Code version 2.1.277 added support for AGENTS.md, a file designed to serve as project instructions when no CLAUDE.md exists. However, according to testing documented in issue #95690, the feature is gated behind a remote flag that depends on telemetry being enabled.
The AGENTS.md loader ships as a built-in plugin called agents-md. Its availability depends on a remote feature flag called tengu_agents_md_mod, which defaults to false. When Claude Code cannot fetch this flag—such as when telemetry or nonessential traffic is disabled—the plugin becomes unavailable and local AGENTS.md files are never read.
Testing shows that setting either DISABLE_TELEMETRY=1 or CLAUDE_CODE_DISABLE_NONESSENTIAL_TRAFFIC=1 blocks the feature. Notably, the application provides no warning when skipping a local file. Users report that the session starts normally, the model responds without the project instructions, and nothing indicates that a file was skipped. This silent failure affects multiple scenarios: developers who intentionally disable telemetry, teams using third-party gateways like Bedrock and Vertex where feature flags cannot resolve, and anyone relying on privacy-focused configurations.
The author tested this behavior using a canary word in an AGENTS.md file and found that session-level overrides can enable the feature from the second session onward, but project-level settings in .claude/settings.json have no effect. There is no way to enable AGENTS.md support for a single repository while keeping telemetry disabled.
A documented workaround exists: CLAUDE.md supports @path imports, which do not depend on the feature flag. A single-line CLAUDE.md containing @AGENTS.md allows the instructions to load regardless of telemetry settings, though this reintroduces the extra file that AGENTS.md support was meant to eliminate.
The core concern is that a privacy setting silently disables unrelated local behavior. Reading a file from the working directory requires no network access, yet the feature gate blocks it when telemetry is off. The author argues that if a gradual rollout requires a feature flag, at minimum a visible warning should notify users when an AGENTS.md file is present but skipped.
Key facts
- Claude Code 2.1.277 added AGENTS.md support but gates it behind a remote feature flag tied to telemetry settings
- Disabling telemetry or nonessential traffic silently prevents AGENTS.md files from loading with no warning
- The feature flag defaults to false and fails silently when it cannot be fetched from the server
- Project-level configuration cannot enable AGENTS.md support when telemetry is disabled
- A one-line CLAUDE.md using @AGENTS.md import syntax provides a workaround that works with telemetry disabled
- The issue affects privacy-conscious developers and teams using third-party gateways where feature flags cannot resolve