Linux From ScratchThis Forum is for the discussion of LFS.
LFS is a project that provides you with the steps necessary to build your own custom Linux system.
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I am sorry if this sounds too stupid, but have you checked to see if /tools/bin/env actually exists? If not it may be part of a step you have missed.
On the other hand, I may be completely wrong. It is a long time since I tried to build an LFS system (and gave up on it halv way), and this may be a more serious error, but I remember several times when I had to backtrace my steps to actually do a step I was sure I had done a long time ago.