As long as they're there with only one kid.
This is a stoooopid rule. A towel over the shoulder, and the whole thing's invisible. And if the Y can't hire lifeguards who can be trusted to watch the water, then I'd say the Y has more pressing problems than breast feeding.
It might be a stupid rule to you, but if you don't allow anyone else to eat or drink in the pool area, then that should include babies as well. You don't do for one what you can't do for all. When you bend the rules to accommodate one group, another group will make demands of their own, and it will go on and on. Many breast feeding women substitute a bottle when they are out in public. Not all woman feel the need to advertise that they nurse.