Parser failure on "localEnv:" in devcontainer-feature.json

[lesslogic]

When trying to inject a host environment variable into the container like this (in devcontainer-feature.json)

"containerEnv": {
    "MY_API_KEY": "${localEnv:MY_API_KEY}"
  }

the following error is returned:

UndefinedVar: Usage of undefined variable '$localEnv' (line 23)
Dockerfile.extended:23
--------------------
  21 |     echo "_REMOTE_USER_HOME=$( (command -v getent >/dev/null 2>&1 && getent passwd 'vscode' || grep -E '^vscode|^[^:]*:[^:]*:vscode:' /etc/passwd || true) | cut -d: -f6)" >> /tmp/dev-container-features/devcontainer-features.builtin.env
  22 |     
  23 | >>> ENV MY_API_KEY="${localEnv:MY_API_KEY}"
  24 |     RUN --mount=type=bind,from=dev_containers_feature_content_source,source=opencode-psi_0,target=/tmp/build-features-src/opencode-psi_0 \
  25 |         cp -ar /tmp/build-features-src/opencode-psi_0 /tmp/dev-container-features \
--------------------
[2026-08-04T06:11:06.442Z] 
ERROR: failed to build: failed to solve: failed to process "\"${localEnv:MY_API_
_KEY}\"": unsupported modifier (:M) in substitution

The issue seems to be that the "localEnv:" substring is not getting substituted before being passed to Docker, whose parser then trips on ":M" (or apparently any other colon-letter combination). Indeed, the error message goes away by inserting a hyphen after the colon:

"containerEnv": {
    "MY_API_KEY": "${localEnv:-MY_API_KEY}"
  }

But then the value passed into the container environment is the literal string "MY_API_KEY:":

env | grep MY_API_KEY
MY_API_KEY=MY_API_KEY: