Everything from THAT to WORKERS is modifying the noun INDUSTRIES. So what do we have? Industries THAT x and THAT y. What are our x and y?
x = ARE clean and fast-growing
y = PAY good wages

C is the answer

The sentence lists three characteristics of the industries that many states most desire to attract. The answer choices each provide ways to conjoin these characteristics within the sentence.

Normally, a series of three nouns or adjectives would have a comma following each one, with and preceding the third. Note that this method requires adequate parallelism among the three items.

As written, the third of these characteristics is conveyed by a verb form, either pay or paying. However, the first of the three items is the adjective clean, which is of course not parallel with the verb pay.

A. This choice is incorrect for the reasons stated above.

B. The adjective clean is not parallel with pay.

C. Correct. Both clean and fast-growing are adjectives and are therefore parallel; they can correctly be conjoined by and. This choice creates a sentence with the relative clause that pay . . . workers. Notice that the sentence has another relative clause that are clean and fast-growing. This relative clause parallels the other one. Using and to conjoin these two clauses, each modifying industries, is logical and correct.

D. The adjective clean is not parallel with the verb grow.

E. The adjective clean is not parallel with the verb form paying.

The correct answer is C.