Two of the appeals judges, William Bauer and Diane Wood, found that the $6 million to $8 million that the Pentagon spends to set up tents and make other arrangements for the event was not the sort of spending that can be challenged by taxpayers.

"In a time when the armed forces regularly spend significant funds both for recruitment and for public relations, Congress's decision to authorize them to take advantage of a built-in audience of potential recruits is reasonably related to the activities authorized by the Military Clauses," Judge Wood wrote in an opinion joined by Judge Bauer. "Although some support of the organization does occur, the statute does not turn money or services over to BSA to handle any way it wants."

Judge Diane Sykes objected to some aspects of the majority's reasoning but agreed with the conclusion. She said the fact that the plaintiffs, who are represented by the American Civil Liberties Union of Illinois, allowed the 2005 event to go forward despite the lower court's ruling "undermines any claim that they were suffering a grave constitutional injury."