This is not uncommon in many districts today. That is why it is imperative that clubs give back to their high school/middle school programs with the donation of time, money and effort. It is also important to have club members regularly attend school board meetings so that some of these anti-little league policies are headed off before they are enacted.
Right now I would suggest that everyone write carefully worded letters to the school board members expressing your dissapointment at such a policy. Suggesting that you will be exploring transferring your child to a neighboring district that has no such policy can be used as well. School districts are much like retail businesses because they are reimbursed tax dollars from the state on a per-pupil basis. The one thing they understand is declining enrollments and the effect they have on their budgets. So let your feet do the talking by taking your kids to another district if that is at all possible.