Index: src/main/java/org/jruby/webapp/AbstractRailsServlet.java
===================================================================
--- src/main/java/org/jruby/webapp/AbstractRailsServlet.java	(revision 562)
+++ src/main/java/org/jruby/webapp/AbstractRailsServlet.java	(working copy)
@@ -124,9 +124,16 @@
 	}
 
 	protected String getDeploymentEnvironment() {
-        String railsEnv = getServletConfig().getInitParameter("rails.env");
-        if (railsEnv == null) {
-            railsEnv = getServletContext().getInitParameter("rails.env");
+		String railsEnv = null;
+        if (isStandalone()) {
+			railsEnv = System.getenv("RAILS_ENV");
+		}
+		
+		if (railsEnv == null) {
+			railsEnv = getServletConfig().getInitParameter("rails.env");
+        	if (railsEnv == null) {
+            	railsEnv = getServletContext().getInitParameter("rails.env");
+			}
         }
         return railsEnv;
 	}