There exists a ton of working code that does not fiddle with setenv and now would have memory leaks if they don't change their code? Plus I would now need to test if my stdlib requires freeing memory or not because if I try to free on an older libc it is not going to work out well. I don't think the value works out.

From a hygiene perspective - freeing the return of another API is an anti pattern. If you need the caller to release objects there should provide a FooLib_bar_destory(bar) or similar.