U.S.M.S. is more of a club, and as such has rules regarding gender definitions.
You should direct your outrage to U.S.M.S.
https://www.usms.org/about/what-is-us-masters-swimming
U.S. Masters Swimming (USMS) allows transgender swimmers to compete in the gender category they identify with. This includes participation in competitions, ranking, and official recognition. The policy, outlines by U.S. Masters Swimming, allows trans or non-binary individuals to self-identify and compete in the appropriate category.
Personally, I would be in favor of a ban here based some percentage difference in personal best times. But this is a non-profit club and is not subject to my opinion.