the amount that was dumped before the agreement was reduced

so past perfect was right i guess

winnerhere.....even i went with what u said...but in D the meaning is changed...D mentions the situation after the act..

GUEST....wht r ur thots???

Option A.
This option looks so correct but a better view of it in a critical and analytical way makes it contain some subtle error.
'had been allowed to dump, mind you this agreement had been signed between Canada and USA.Had been here signified past action and a 'dumped' should follow.Also, be mindful that this dumping might still continue. So the use of 'had been' makes the sentence looks half-baked and it does not get its full thumbs up.

Option b.
Yes, the use of reduced makes the introduction to this option to be correct but I would choose 'amount of Phosphates' over 'phosphate amount' This makes the option incorrect.

Option C.
reduces? since the agreement that happened between Canada and the United States happened in the past thus reduced should be changed to 'reduced'
Therefore this option is invalid.

Option d.
What happened in the agreement between the United States and Canada ' reduced' yes because it was an event in the past.
'amount of phosphates' phosphate here is an uncountable noun.Such as water so it attracts a preceding noun like 'amounts'
'are allowed to dump' follows a regular grammatical pattern.
'reduced the amount of phosphates that municipalities are allowed to dump'
THIS IS THE CORRECT ANSWER!!!

Option E.
reduces??? this is the type of error in option C above, even without further ado, it has rendered this option invalid.
'allowed for dumping by municipalities' this sounds really inconvenient to the ear.