Hi @jackpopp - I'm having the same issue.
I'm not certain why the env is ignored, but it looks as though it's expected behaviour... https://github.com/laravel/framework/issues/8844
@mabasic came up with a workaround... https://laracasts.com/discuss/channels/general-discussion/how-to-migrate-a-testing-database-in-laravel-5
I'll post back if I can find an answer!