my 1up standard does the same. I keep tailgate cables in upper position so I don’t accidentally forget and let it fall onto the rack.
The 1up equip d may allow the tailgate to go down all the way when racks set to lowest position. Looking at the diagrams/specs it sits an inch and a half or so...
can you open the tailgate without it hitting any part of the rack? I have a 1up quick rack and even when it’s in its down position the tailgate will hit the rack. I have been keeping the cables attached to the higher secondary opening point just in case. I know the version of your rack is lower...