If you use the script in the classic blog post http://puppetlabs.com/blog/git-workflow-and-puppet-environments you have Config File Environments located at /etc/puppet/environments. Unfortunately, Puppet 3.5.0 will treat them as Directory Environments. If you have a modulepath such as this:
it will not be used. You have to move your environments someplace else.
It is a pity that Puppet 3.5.0 reused the proposed location from that blog post. The transition would have been less painful if another location had been used.
Failing that, it would have been less painful if the resolution order had been Config File Enviroment -> DIrectory Environment -> global environment.
At the very least, this should be mentioned in the release note and on http://docs.puppetlabs.com/puppet/3.5/reference/environments.html. It was a bit hard to find the resultion order deep down in http://docs.puppetlabs.com/puppet/3.5/reference/environments_classic.html#interaction-with-directory-environments.