1. The first decision that you have to make here is whether to choose GROUND OF or GROUND THAT. People make statements or take decisions on THE GROUND THAT something is the case: thus, you could eliminate the options using GROUND OF. (And if the clumsy form that has to follow GROUND OF were to have even a slight chance, it would have to use the pronoun ITS, thus: ON THE GROUND OF ITS VIOLATING, since what is violating a law is a singular BAN.)
2. Between options C and D you must choose D, because the judge OVERTURNED the ban on the ground that it VIOLATED a law: there is no reason to shift the tense of the second verb into the Present Simple, as option C does.
3. Option E has no possibility because its meaning is unclear.
Laws were being violated allowing the use of personal watercraft Which laws are these? Are these laws related in any way to the use of water bikes? The option seems to imply that the violation of the laws actually led to the allowing of the use of watercraft, so nothing makes sense here.
4. In option D the grammar is right, the idiom is right, and the meaning is clear, so creating a logical sentence. The laws in question are LAWS ALLOWING THE USE OF PERSONAL WATERCRAFT, and on the ground that the ban violated those laws, the judge overturned the ban.
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