Why environment variable substitution does not work in bash in this case?

Question

I am trying to set the ENV variable just for the scope of this command

ENV=dev echo terraform plan -state=$ENV.tfstate -var-file=$ENV.tfvars -out=$ENV.plan

the output is for some reason:

 terraform plan -state=.tfstate -var-file=.tfvars -out=.plan

Why is it?

I am using bash in osx mojave