diff --git a/bootstraptest/test_env.rb b/bootstraptest/test_env.rb
new file mode 100644
index 0000000000..7d1b45b75e
--- /dev/null
+++ b/bootstraptest/test_env.rb
@@ -0,0 +1,12 @@
+assert_equal "true", %q{
+  ENV["ENVTEST"] = "\u{e9 3042 d76c}"
+  env = ENV["ENVTEST"]
+  env.valid_encoding?
+}
+
+# different encoding is used for PATH
+assert_equal "true", %q{
+  ENV["PATH"] = "\u{e9 3042 d76c}"
+  env = ENV["PATH"]
+  env.valid_encoding?
+}
diff --git a/hash.c b/hash.c
index b53bb1660e..ba6053dbfc 100644
--- a/hash.c
+++ b/hash.c
@@ -3360,7 +3360,7 @@ env_enc_str_new(const char *ptr, long len, rb_encoding *enc)
     rb_encoding *utf8 = rb_utf8_encoding();
     VALUE str = rb_enc_str_new(NULL, 0, (internal ? internal : enc));
     if (NIL_P(rb_str_cat_conv_enc_opts(str, 0, ptr, len, utf8, ecflags, Qnil))) {
-	rb_str_initialize(str, ptr, len, utf8);
+        rb_str_initialize(str, ptr, len, NULL);
     }
 #else
     VALUE str = rb_external_str_new_with_enc(ptr, len, enc);