In which case perhaps the proposed legislation is actually pretty good about how to identify sex... look at the genitalia, and only follow up with the genetics

In which case perhaps the proposed legislation is actually pretty good about how to identify sex... look at the genitalia, and only follow up with the genetics if that's ambiguous. The proposed legislation looks better in light of this, not worse. It proposes to identify by phenotype rather than genotype (although ultimately by genotype of specific genes that result in different genitalia), which is a practical way of categorizing people by the genes (most of) society actually cares about in this case.