The Basque country is a community in northern spain, that has a different culture than the rest of the country and as far as I know, many of them want independancy from Spain.
Bilbao is the Capital of that community and the football team has on their own decided to not sign any players who does not have any ties to the said community. Either by being born there or have parents who are from there. I think they are allowed to sign spanish players as well, as long as they are under the age of 18 or something.
It's not a rule anyone has made to make it harder for them, but a policy they've decieded on their own to have. To take it away in the editor will, in my oppinion, take a way apart of the clubs culture and shouldn't be done. If you dislike their idea, play another team and buy all their players.