diff --git a/apps/server/src/policy/ManagedPolicy.test.ts b/apps/server/src/policy/ManagedPolicy.test.ts
index 26e74f05b0372..d6c7710b57ead 100644
--- a/apps/server/src/policy/ManagedPolicy.test.ts
+++ b/apps/server/src/policy/ManagedPolicy.test.ts
@@ -142,6 +142,11 @@ it.layer(NodeServices.layer)("ManagedPolicy.load", (it) => {
               },
             },
           }),
+          // Startup reads OTLP endpoints before the policy, and environment variables outrank them.
+          JSON.stringify({
+            ...base,
+            settings: { "observability.otlpTracesUrl": { value: "", locked: true } },
+          }),
         ],
         (contents) =>
           loadFrom(contents).pipe(
@@ -149,7 +154,7 @@ it.layer(NodeServices.layer)("ManagedPolicy.load", (it) => {
             Effect.map((error) => error.reason),
           ),
       );
-      assert.lengthOf(reasons, 13);
+      assert.lengthOf(reasons, 14);
       assert.include(reasons[3], "storageCleanup.logsAfterDayz");
       assert.include(reasons[6], "adds entries users could not remove");
       assert.include(reasons[7], "adds entries users could not remove");
@@ -158,6 +163,7 @@ it.layer(NodeServices.layer)("ManagedPolicy.load", (it) => {
       assert.include(reasons[10], 'lock "worktreeCleanup" too');
       assert.include(reasons[11], 'lock "providerInstances.codex" as a whole');
       assert.include(reasons[12], "holds a credential");
+      assert.include(reasons[13], "a policy cannot override");
     }),
   );
 
diff --git a/apps/server/src/policy/managedSettings.ts b/apps/server/src/policy/managedSettings.ts
index 7ae0cf6aa2b60..0d41d18ddce26 100644
--- a/apps/server/src/policy/managedSettings.ts
+++ b/apps/server/src/policy/managedSettings.ts
@@ -28,6 +28,13 @@ const UNMANAGEABLE_KEYS: ReadonlySet<string> = new Set([
   "projectScriptOverrides",
 ]);
 
+/**
+ * Startup resolves OTLP endpoints from the settings file and desktop bootstrap input before the policy
+ * loads, and the user's OTLP environment variables outrank them, so a managed value would look
+ * enforced without being.
+ */
+const ENVIRONMENT_OVERRIDDEN_KEYS: ReadonlySet<string> = new Set(["observability"]);
+
 /** Legacy settings the server derives from another on every write; manage that one instead. */
 const DERIVED_FROM: ReadonlyMap<string, string> = new Map([
   ["compactIdleThreads", "idleCompaction"],
@@ -253,6 +260,12 @@ export function makeManagedSettings(
     if (!(head in ServerSettings.fields) || UNMANAGEABLE_KEYS.has(head)) {
       return { _tag: "Invalid", reason: `"${path}" is not a setting this version can manage` };
     }
+    if (ENVIRONMENT_OVERRIDDEN_KEYS.has(head)) {
+      return {
+        _tag: "Invalid",
+        reason: `"${path}" is resolved at startup from each user's environment, settings file and desktop bootstrap input, which a policy cannot override`,
+      };
+    }
     const source = DERIVED_FROM.get(head);
     if (source !== undefined) {
       return {
diff --git a/docs/user/managed-policy.md b/docs/user/managed-policy.md
index 6017444e52a9f..afd6186f5c076 100644
--- a/docs/user/managed-policy.md
+++ b/docs/user/managed-policy.md
@@ -146,6 +146,8 @@ A few settings need care:
 - `worktreeCleanup`, which projects can also set, overrides the `worktree` rules in
   `storageCleanup`. Lock it along with those rules; T3 Code refuses a policy that locks only the
   rules.
+- `observability` cannot be managed. Its OTLP endpoints come from each user's environment
+  variables, settings file and desktop startup input, which a policy cannot override.
 - Manage `idleCompaction`, not the older `compactIdleThreads`. A Claude instance's own idle
   compaction choice still wins over `idleCompaction`.
 - A provider instance's fields override each other, so lock `providerInstances.<id>` as a whole,