Waterlogged caves ignore the default fluid of the overworld

Note: The actual affected/tested version is 1.16.5 the form only allows 1.17.1 or 21w37a at creation

If the default fluid is changed to air using 1.16 custom world generation, waterlogged caves still are filled with water. 

What I expected:

When changing the default fluid to air, aquatic biomes should not generate with surface water nor should their caves be flooded.

What Happened:

Rivers and swamps did not have surface water

Oceans did have waterlogged cave networks generating. Frozen Oceans also generate with icebergs either due to the waterlogged caves appearing above the ocean floor or just because that's normal regardless of water level.

Reproducing:

Aquire a custom world json file by exporting it off a world in your version.

Expand the overworld from its presets to its extended default settings. This may be difficult for 1.17+ reproduction since the extended settings appear to be different than what's on the custom worldgen wiki page

Change the default fluid line from water to air.  Import the file while making a new world.

Find any ocean(/locatebiome helps).

Screenshots taken from world using the attached json and a seed of 48.