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Clarify dual .env file precedence behavior #25394

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Clarify dual .env file precedence behavior #25394

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7 changes: 7 additions & 0 deletions content/manuals/compose/how-tos/environment-variables/envvars-precedence.md
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Expand Up @@ -21,6 +21,13 @@ The order of precedence (highest to lowest) is as follows:
5. Set in a container image in the [ENV directive](/reference/dockerfile.md#env).
Having any `ARG` or `ENV` setting in a `Dockerfile` evaluates only if there is no Docker Compose entry for `environment`, `env_file` or `run --env`.

> [!NOTE]
>
> Compose can load both a local `.env` file and a project-directory `.env` file.
> When both files are present, the local `.env` file takes precedence over the
> project-directory `.env` file. For more information, see
> [local `.env` file versus <project directory> `.env` file](variable-interpolation.md#local-env-file-versus-project-directory-env-file).

## Simple example

In the following example, a different value for the same environment variable in an `.env` file and with the `environment` attribute in the Compose file:
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