Unable to use "Environment Layer." Selection ghosted out

I'm trying to create an environment layer in a project I'm working on. I bring in an image, but whenever I attempt to use it as an environment layer the selection is ghosted out. This happens reliably regardless of what kind of image I use, whether it is precomposed, etc. There is nothing in any documentation or tutorial I can find to explain this. Does anybody have an idea why this might be occurring?

Thanks!