Is it common in other areas for a school district to deny a parent’s request for an outside agency to observe their child in the classroom?
The child attends ABA Therapy two days a week and then attends school three days. I'm requesting my child’s BCBA to observe him, in his classroom setting, in order to better provide therapy when he is in the clinic. This could benefit the student, the adults who work with him, as well as his peers.  The school district is denying it, citing privacy and confidentiality laws. (I am composing a parent concerns letter and asking for them to provide the law that states it). Our BCBA is already bound by HIPAA laws, due to professional licensure.  Your thoughts and suggestions are appreciated. 

I think it depends on the area. Lisa has info on parent observations in schools at https://adayinourshoes.com/can-parents-observe-classroom-iep/. Since it's a professional you've requested to observe and  the district denied the request citing privacy and confidentiality laws, you can always ask them to show you the specific sections of the law that don't allow the private BCBA to observe.

Sometimes what a school says is 'policy' is not what the district has written as policy.  That said, I'd ask to see a copy of their policy.  If district policy say no 3rd parties can come & observe, I feel this is a violation.  How can you get an IEE (at school or parent expense) if no one can go into the school & observe?  This becomes an issue for the Disability Rights group and/or the dept of ed in your state as it violates the rights in IDEA.

I'd ask them about policy in your letter since schools don't write laws.  IMO, there are laws that say a 3rd party can observe but I'm not a lawyer which is what I suggest reaching out to disability rights - they have lawyers.