why not C
The correct choice should state what Carter's directive was - A does this by use of subjunctive mood.
IMO C is incorrect, because it has incorrect sequence of the prepositional phrases (I am not sure if there is a rule to this).
The other problem with C is the use of the ing form - this incorrectly indicates that the rescinding Carter's directive was done while prohibiting the sale of chemicals whereas the sentence should mean X rescinded Y's directive, which was Z.
Z should describe Y's directive