"A transgender student’s presence in the restroom provides no more of a risk to other students’ privacy rights than the presence of an overly curious student of the same biological sex..."

"... who decides to sneak glances at his or her classmates performing their bodily functions. Or for that matter, any other student who uses the bathroom at the same time. Common sense tells us that the communal restroom is a place where individuals act in a discreet manner to protect their privacy and those who have true privacy concerns are able to utilize a stall. Nothing in the record suggests that the bathrooms at Tremper High School are particularly susceptible to an intrusion upon an individual’s privacy. Further, if the School District’s concern is that a child will be in the bathroom with another child who does not look anatomically the same, then it would seem that separate bathrooms also would be appropriate for pre-pubescent and post-pubescent children who do not look alike anatomically. But the School District has not drawn this line. Therefore, this court agrees with the district court that the School District’s privacy arguments are insufficient to establish an exceedingly persuasive justification for the classification."

From the 7th Circuit Court of Appeals opinion in Whitaker v. Kenosha Unified School District, which affirmed the grant of a preliminary injunction to a Wisconsin transgender student wanting seeking access to the bathroom of choice. (For a shorter read, here's a Slate article about the case.)