Content exclusion incorrectly blocks commands when a child process loads .env

[Kerbz-dev]

Describe the bug

Our organization has the following content-exclusion policy:

"*":
  - "**/.env"

The policy should prevent Copilot from reading .env files or using their contents as model context.

However, Copilot CLI also blocks starting an application when the application itself loads .env during normal startup.

For example, our Python application uses load_dotenv() during startup. The application starts successfully when run directly in the terminal, but Copilot CLI refuses to continue when asked to run the same approved command.

The error shown is:

Access denied: "[REDACTED]/.env" is excluded by organization content policy. Do not attempt to access this file.

Copilot does not need to read .env, receive its contents, or include them in model context for the application to start.

Affected version

GitHub Copilot CLI 1.0.83

Steps to reproduce the behavior

1. Configure an organization content-exclusion rule for **/.env.
2. Create an application that loads .env internally during startup, for example using python-dotenv and load_dotenv().
3. Verify that the application starts successfully when run directly in a terminal.
4. Ask Copilot CLI to run the same startup command.
5. Approve the command.
6. Observe that Copilot CLI refuses to continue because .env is excluded.

Expected behavior

Copilot CLI should execute the approved command.

Content exclusion should prevent Copilot from reading or using .env contents as model context, but should not prevent an application from loading the file internally as runtime configuration.

Additional context

• OS: macOS 26.6.2
• Architecture: arm64
• Shell: zsh

This began after content exclusions became generally available in Copilot App and CLI on September 2, 2026:
https://github.blog/changelog/2026-09-02-content-exclusions-generally-available-in-copilot-app-and-cli/