amrinder, please include your specific question and/or questions over a particular problem so we can tailor our responses to your concerns.
Broadly, the agreement mentioned in this problem took place in the past, so the past tense verb
reduced is necessary. Eliminate C and E. However, an agreement can only reduce the amount of phosphates that municipalities are allowed to dump moving forward (it is a physical impossibility to reduce the amount that has already been dumped!). Thus, the present tense
are is preferable to the past perfect
had been.
The correct answer is D.
A 1972 agreement between Canada and the United States reduced the amount of phosphates that municipalities had been allowed to dump into the Great Lakes.
(A) reduced the amount of phosphates that municipalities had been allowed to dump
(B) reduced the phosphate amount that municipalities had been dumping
(C) reduces the phosphate amount municipalities have been allowed to dump
(D) reduced the amount of phosphates that municipalities are allowed to dump
(E) reduces the amount of phosphates allowed for dumping by municipalities