Why was the genetic engineering research at Darwin Station in TNG 2x07 "Unnatural Selection" legal?

Darwin Station was an explicitly Federation genetic research facility which was creating human children with telepathic and telekinetic powers, rapid physical maturation, and immensely powerful active immune systems (the last of which unwittingly killed the crew of a transport ship). This seems like precisely the sort of genetic engineering which has been banned in the Federation since it's conception, in regulations which are repeatedly referenced in TNG, DS9, and VOY. And yet, nobody even hints at there being an ethical, legal, or regulatory issue with what these researchers are doing. Dr. Pulaski even says of one augment child, without any apparent concern, "We could be looking at the future of humanity."

One would think that if one has a broad reaching policy against genetic augmentation principally motivated by the genetic wars, and by subsequent reinforcement of the idea that arbitrarily enhanced people are likely to be dangerously unstable, this sort of genetic program is exactly what that policy exists to prevent. And yet, there is it.

So, what happened here? Was this the product of a brief lull in Federation policy regarding genetic augmentation? A Federation research team going way off the rails, meeting an Enterprise crew feeling unusually liassez-faire about Federation law? Or something else?