diff --git a/spec.html b/spec.html
index 6fd0a846da9..9a452f82f74 100644
--- a/spec.html
+++ b/spec.html
@@ -8621,8 +8621,6 @@ <h1>FunctionDeclarationInstantiation ( _func_, _argumentsList_ )</h1>
       -->
       <emu-alg>
         1. Let _calleeContext_ be the running execution context.
-        1. Let _env_ be the LexicalEnvironment of _calleeContext_.
-        1. Let _envRec_ be _env_'s EnvironmentRecord.
         1. Let _code_ be _func_.[[ECMAScriptCode]].
         1. Let _strict_ be _func_.[[Strict]].
         1. Let _formals_ be _func_.[[FormalParameters]].
@@ -8652,6 +8650,15 @@ <h1>FunctionDeclarationInstantiation ( _func_, _argumentsList_ )</h1>
         1. Else if _hasParameterExpressions_ is *false*, then
           1. If *"arguments"* is an element of _functionNames_ or if *"arguments"* is an element of _lexicalNames_, then
             1. Set _argumentsObjectNeeded_ to *false*.
+        1. If _strict_ is *true* or if _hasParameterExpressions_ is *false*, then
+          1. NOTE: Only a single lexical environment is needed for the parameters and top-level vars.
+          1. Let _env_ be the LexicalEnvironment of _calleeContext_.
+          1. Let _envRec_ be _env_'s EnvironmentRecord.
+        1. Else,
+          1. NOTE: A separate Environment Record is needed to ensure that bindings created by direct eval calls in the formal parameter list are outside the environment where parameters are declared.
+          1. Let _calleeEnv_ be the LexicalEnvironment of _calleeContext_.
+          1. Let _env_ be NewDeclarativeEnvironment(_calleeEnv_).
+          1. Let _envRec_ be _env_'s EnvironmentRecord.
         1. For each String _paramName_ in _parameterNames_, do
           1. Let _alreadyDeclared_ be _envRec_.HasBinding(_paramName_).
           1. NOTE: Early errors ensure that duplicate parameter names can only occur in non-strict functions that do not have parameter default values or rest parameters.