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Dragon Palace, although a part of the Heavenly Court's forces, holds little sway within the entire power structure of the Heavenly Court; it was simply tasked by the Heavenly Court to guard the four seas and to carry out the work of distributing rain and clouds.
If described with modern terminology, it was nothing more than some officials in a remote area far away from the Imperial Capital.
They may look like local emperors on their own turf, but they are still far from the center of power, therefore not really significant.
Isn't there a saying, "Even a seventh-rank official in front of the Prime Minister's gate is higher than the rest"? An official from the capital always holds higher status than one from the provinces.
As the third son of the Western Sea Dragon King, Aolie knew well the delineation of powers within the Heavenly Court.