diff --git a/CONTEXT.md b/CONTEXT.md
index 6b9f2da..df27ad3 100644
--- a/CONTEXT.md
+++ b/CONTEXT.md
@@ -21,8 +21,10 @@ program that actually runs.
 _Avoid_: safe wrapper
 
 **Non-transparent wrapper**:
-A wrapper whose modifier args change the inner command's resolution or effect
-(e.g. `env`, whose `PATH=` or `-i` can make the inner name resolve to a
-different binary). Stripping the modifiers and re-evaluating the inner command
-is unsound: the verdict may apply to a different program than the one that runs.
+A wrapper whose modifiers change what the inner command actually does in a way
+the command string does not capture — e.g. `env` (its `PATH=` / `LD_PRELOAD`
+make the inner name resolve to or load a different program) or `xargs` (its
+inner command's arguments are read from stdin). Stripping the modifiers and
+re-evaluating the inner command is unsound: the verdict applies to inputs that
+are not knowable from the command string.
 _Avoid_: unsafe wrapper
diff --git a/docs/adr/0003-xargs-defers-and-typically-asks.md b/docs/adr/0003-xargs-defers-and-typically-asks.md
new file mode 100644
index 0000000..57e45b7
--- /dev/null
+++ b/docs/adr/0003-xargs-defers-and-typically-asks.md
@@ -0,0 +1,38 @@
+---
+status: accepted
+---
+
+# Defer `xargs`; it is non-transparent even to the AI judge
+
+`xargs` is a third command type considered for `pi-permission-inner-cmd`. Like
+`env` (ADR 0002), inner-cmd **always defers** it and never unwraps. Unlike `env`,
+the non-transparency is in the inner command's *arguments*, not its environment.
+
+## Why
+
+`xargs [options] [command [initial-args]]` reads tokens from stdin (or `-a
+FILE`) and appends them as arguments to `command`. The command string therefore
+holds only the command *name* (plus any initial args); the bulk of what the
+command actually does — its runtime arguments — comes from a separate channel
+that is absent from the string entirely. Re-evaluating the inner command is
+unsound: the verdict would apply to arguments that are not even knowable from the
+input (`xargs rm` can become `rm` over any list of files). `-I` / `-i`, `-a`,
+`-P`, `-o` further alter behavior.
+
+There is no sound unwrap subset (unlike `env`'s rare bare form): `xargs` always
+draws its arguments from an external source, so the inner command is never fully
+determined by the string.
+
+## Consequences
+
+- inner-cmd registers an `xargs` handler that claims `xargs`-leading commands and
+  defers them (mirroring `env`), for observability. Note that `xargs` usually
+  appears mid-pipeline (`find … | xargs rm`), where inner-cmd's leading-program
+  check never reaches it and it defers by default regardless.
+- The deferred command reaches the AI judge — but the AI judge *also* cannot see
+  stdin, so it cannot know the actual arguments either. `xargs` commands
+  therefore typically warrant a human **ask** rather than an auto-allow, even
+  with AI judgement; the sound outcome is human confirmation.
+
+See ADR 0002 for the sibling `env` decision and `CONTEXT.md` for the
+non-transparent wrapper distinction.
diff --git a/packages/pi-permission-inner-cmd/src/handlers/index.ts b/packages/pi-permission-inner-cmd/src/handlers/index.ts
index b2be538..677ecac 100644
--- a/packages/pi-permission-inner-cmd/src/handlers/index.ts
+++ b/packages/pi-permission-inner-cmd/src/handlers/index.ts
@@ -1,5 +1,6 @@
 import { envHandler } from "./env";
 import { timeoutHandler } from "./timeout";
+import { xargsHandler } from "./xargs";
 import type { CommandHandler } from "./types";
 
 /**
@@ -7,4 +8,8 @@ import type { CommandHandler } from "./types";
  * claims the command; the rest are not consulted. Add a handler here (and a
  * new file under `handlers/`) to support a new command type.
  */
-export const handlers: readonly CommandHandler[] = [timeoutHandler, envHandler];
+export const handlers: readonly CommandHandler[] = [
+    timeoutHandler,
+    envHandler,
+    xargsHandler,
+];
diff --git a/packages/pi-permission-inner-cmd/src/handlers/xargs.ts b/packages/pi-permission-inner-cmd/src/handlers/xargs.ts
new file mode 100644
index 0000000..1952106
--- /dev/null
+++ b/packages/pi-permission-inner-cmd/src/handlers/xargs.ts
@@ -0,0 +1,27 @@
+import type { CommandHandler } from "./types";
+
+/** Matches a command whose leading program is `xargs`. */
+const XARGS_PREFIX = /^xargs(?:[ \t]|$)/;
+
+/**
+ * The `xargs` wrapper handler (ADR 0003).
+ *
+ * `xargs` is non-transparent in a way distinct from `env`: the inner command's
+ * name is known, but its arguments are read from stdin (or `-a FILE`) at run
+ * time, so they are absent from the command string entirely. Re-evaluating the
+ * inner command is unsound — the verdict would apply to arguments that are not
+ * even knowable from the input. `xargs` is claimed but always deferred; it
+ * never unwraps. (`xargs` usually appears mid-pipeline, so inner-cmd's
+ * leading-program check rarely reaches it; this handler covers the rarer
+ * `xargs`-as-leading-program case for observability.)
+ */
+export const xargsHandler: CommandHandler = {
+    id: "xargs",
+    decide({ command, log }) {
+        if (!XARGS_PREFIX.test(command)) {
+            return undefined;
+        }
+        log.debug("inner_cmd.xargs_non_transparent", { command });
+        return { kind: "defer" };
+    },
+};
diff --git a/packages/pi-permission-inner-cmd/test/authorizer.test.ts b/packages/pi-permission-inner-cmd/test/authorizer.test.ts
index 44cdf9f..212ac1b 100644
--- a/packages/pi-permission-inner-cmd/test/authorizer.test.ts
+++ b/packages/pi-permission-inner-cmd/test/authorizer.test.ts
@@ -432,6 +432,36 @@ describe("authorizeInnerCommand — env wrapper", () => {
     });
 });
 
+describe("authorizeInnerCommand — xargs wrapper", () => {
+    it("defers on a leading xargs with a debug log (non-transparent args)", async () => {
+        const { verdict, log, check } = await run({
+            recoveredCommand: "xargs rm",
+            states: { rm: "allow" },
+        });
+        expect(verdict.kind).toBe("defer");
+        // xargs arguments come from stdin, so the inner command is never
+        // re-evaluated through the deterministic policy.
+        expect(check).toEqual([]);
+        expect(log).toEqual([
+            {
+                level: "debug",
+                event: "inner_cmd.xargs_non_transparent",
+                details: { command: "xargs rm" },
+            },
+        ]);
+    });
+
+    it("does not claim a command where xargs appears mid-pipeline", async () => {
+        // Starts with find, not xargs -> no handler claims it -> silent defer.
+        const { verdict, log } = await run({
+            recoveredCommand: "find . -name '*.tmp' | xargs rm",
+            states: {},
+        });
+        expect(verdict.kind).toBe("defer");
+        expect(log).toEqual([]);
+    });
+});
+
 describe("authorizeInnerCommand — exceptions defer with a debug log", () => {
     it("defers when reading the session id throws (logs only safe data)", async () => {
         const { verdict, log } = await run({