diff --git a/Rules/UseDeclaredVarsMoreThanAssignments.cs b/Rules/UseDeclaredVarsMoreThanAssignments.cs
index 296d79da9..fc72e18ea 100644
--- a/Rules/UseDeclaredVarsMoreThanAssignments.cs
+++ b/Rules/UseDeclaredVarsMoreThanAssignments.cs
@@ -141,10 +141,10 @@ private IEnumerable<DiagnosticRecord> AnalyzeScriptBlockAst(ScriptBlockAst scrip
 
                 if (assignmentVarAst != null)
                 {
-                    // Ignore if variable is global or environment variable or scope is function
+                    // Ignore if variable is global or environment variable or scope is drive qualified variable
                     if (!Helper.Instance.IsVariableGlobalOrEnvironment(assignmentVarAst, scriptBlockAst)
                         && !assignmentVarAst.VariablePath.IsScript
-                        && !string.Equals(assignmentVarAst.VariablePath.DriveName, "function", StringComparison.OrdinalIgnoreCase))
+                        && assignmentVarAst.VariablePath.DriveName == null)
                     {
                         string variableName = Helper.Instance.VariableNameWithoutScope(assignmentVarAst.VariablePath);
 
diff --git a/Tests/Rules/UseDeclaredVarsMoreThanAssignments.tests.ps1 b/Tests/Rules/UseDeclaredVarsMoreThanAssignments.tests.ps1
index 4e4f43df7..d10d77b4c 100644
--- a/Tests/Rules/UseDeclaredVarsMoreThanAssignments.tests.ps1
+++ b/Tests/Rules/UseDeclaredVarsMoreThanAssignments.tests.ps1
@@ -83,5 +83,10 @@ function MyFunc2() {
             $results = Invoke-ScriptAnalyzer -ScriptDefinition '$list | ForEach-Object { $array += $c }' | Where-Object { $_.RuleName -eq $violationName }
             $results.Count | Should -Be 0
         }
+
+        It "Does not flag drive qualified variables such as env" {
+            $results = Invoke-ScriptAnalyzer -ScriptDefinition '$env:foo = 1; function foo(){ $env:bar = 42 }'
+            $results.Count | Should -Be 0
+        }
     }
 }
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