Hi Shankar,
Paleontologist Stephen Jay Gould has argued that many biological traits are not the products of natural selection, favored due to their enhancement of reproduction or survival, but that they are simply random by-products of other evolutionary developments.
Sorry for having missed this one. Let’s split the clauses here:
(blue = subjcets, green = verbs)
Cl. 1:
Paleontologist Stephen Jay Gould has argued (IC)
Cl. 2: that
many biological traits are not the products of natural selection, favored due to their enhancement of reproduction or survival, but (DC)
Cl. 3: that
they are simply random by-products of other evolutionary developments. (DC)
We have in all 3 clauses in this sentence as shown as we have 3 SV pairs. When “that” acts a connector, it connects an IC with a DC. The clause followed by that becomes the DC. This is so because the second clause has been cited to complement the first clause.
So in such constructions, even if the clause following “that” sounds more like a complete idea, they are the DCs because they are preceded by “that’. This is the reason why clauses 2 and 3 in the above sentence are DCs because they both are preceded by “that”.
Now let’s split the second sentence:
The government predicts that, for consumers and businesses that make a large number of long-distance calls, the Federal Communications Commission’s recent telephone rate cuts will greatly reduce costs, though some consumer groups disagree with the government’s estimates, suggesting they are too optimistic.
Cl. 1:
The government predicts (IC)
Cl. 2: that, for consumers and businesses
Cl. 3:
that make a large number of long-distance calls, (DC)
Cont. of Cl. 2: the Federal Communications Commission’s recent
telephone rate cuts will greatly
reduce costs, (DC)
Cl. 4: though
some consumer groups disagree with the government’s estimates, suggesting
Cl. 5:
they are too optimistic. (DC)
That “that” beginning Cl. 2 is a connector while the “that” beginning Cl. 3 is the relative pronoun, the subject of that clause. Also notice that connector "that" is understood in the beginning of Cl. 5. When "that" is used a s connector, it can be understood.
P.S- The concepts namely Sentence Structure Part 1 and Part 2 along with other concepts feature in our free concepts level – Level 1 Preview Concepts. Just log on to
e-gmat.com, register for free and learn all about phrases, clauses, and connectors.
Hope this helps.

Thanks.
Shraddha