From 5ddaccde67869b319acbbcecd68c1bb0e1be3255 Mon Sep 17 00:00:00 2001
From: Christine Betts <chrstn@uw.edu>
Date: Tue, 24 Feb 2026 15:41:40 -0500
Subject: [PATCH] address comment

---
 packages/cli/src/config/extension.test.ts | 105 ++++++++++++++++++++++
 1 file changed, 105 insertions(+)

diff --git a/packages/cli/src/config/extension.test.ts b/packages/cli/src/config/extension.test.ts
index 0148fc7729..f2bd736e85 100644
--- a/packages/cli/src/config/extension.test.ts
+++ b/packages/cli/src/config/extension.test.ts
@@ -360,6 +360,111 @@ describe('extension tests', () => {
       ]);
     });
 
+    it('should load extension policies from the policies directory', async () => {
+      const extDir = createExtension({
+        extensionsDir: userExtensionsDir,
+        name: 'policy-extension',
+        version: '1.0.0',
+      });
+
+      const policiesDir = path.join(extDir, 'policies');
+      fs.mkdirSync(policiesDir);
+
+      const policiesContent = `
+[[rule]]
+toolName = "deny_tool"
+decision = "deny"
+priority = 500
+
+[[rule]]
+toolName = "ask_tool"
+decision = "ask_user"
+priority = 100
+`;
+      fs.writeFileSync(
+        path.join(policiesDir, 'policies.toml'),
+        policiesContent,
+      );
+
+      const extensions = await extensionManager.loadExtensions();
+      expect(extensions).toHaveLength(1);
+      const extension = extensions[0];
+
+      expect(extension.rules).toBeDefined();
+      expect(extension.rules).toHaveLength(2);
+      expect(
+        extension.rules!.find((r) => r.toolName === 'deny_tool')?.decision,
+      ).toBe('deny');
+      expect(
+        extension.rules!.find((r) => r.toolName === 'ask_tool')?.decision,
+      ).toBe('ask_user');
+      // Verify source is prefixed
+      expect(extension.rules![0].source).toContain(
+        'Extension (policy-extension):',
+      );
+    });
+
+    it('should ignore ALLOW rules and YOLO mode from extension policies for security', async () => {
+      const consoleSpy = vi.spyOn(console, 'warn').mockImplementation(() => {});
+      const extDir = createExtension({
+        extensionsDir: userExtensionsDir,
+        name: 'security-test-extension',
+        version: '1.0.0',
+      });
+
+      const policiesDir = path.join(extDir, 'policies');
+      fs.mkdirSync(policiesDir);
+
+      const policiesContent = `
+[[rule]]
+toolName = "allow_tool"
+decision = "allow"
+priority = 100
+
+[[rule]]
+toolName = "yolo_tool"
+decision = "ask_user"
+priority = 100
+modes = ["yolo"]
+
+[[safety_checker]]
+toolName = "yolo_check"
+priority = 100
+modes = ["yolo"]
+[safety_checker.checker]
+type = "external"
+name = "yolo-checker"
+`;
+      fs.writeFileSync(
+        path.join(policiesDir, 'policies.toml'),
+        policiesContent,
+      );
+
+      const extensions = await extensionManager.loadExtensions();
+      expect(extensions).toHaveLength(1);
+      const extension = extensions[0];
+
+      // ALLOW rules and YOLO rules/checkers should be filtered out
+      expect(extension.rules).toBeDefined();
+      expect(extension.rules).toHaveLength(0);
+      expect(extension.checkers).toBeDefined();
+      expect(extension.checkers).toHaveLength(0);
+
+      // Should have logged warnings
+      expect(consoleSpy).toHaveBeenCalledWith(
+        expect.stringContaining('attempted to contribute an ALLOW rule'),
+      );
+      expect(consoleSpy).toHaveBeenCalledWith(
+        expect.stringContaining('attempted to contribute a rule for YOLO mode'),
+      );
+      expect(consoleSpy).toHaveBeenCalledWith(
+        expect.stringContaining(
+          'attempted to contribute a safety checker for YOLO mode',
+        ),
+      );
+      consoleSpy.mockRestore();
+    });
+
     it('should hydrate ${extensionPath} correctly for linked extensions', async () => {
       const sourceExtDir = createExtension({
         extensionsDir: tempWorkspaceDir,