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itisSheldon In theory, yes, the initial phrase is an adverbial modifier that applies to the main action. However, this doesn't make sense here. The implied meaning would be that the expectation of approval was somehow a natural consequence of the fact that the Authority is overseeing the system. The GMAT would never use an adverbial mdofier in this way. In any case, there are numerous other faults in answer choice E that prevent this sentence from passing muster. I would advise against trying to learn any English grammar from this sentence.
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The International Seabed Authority will oversee the new system by next year, a system approved both as the first project to mine the deep ocean floor off the west coast of Mexico and as the real potential for human interaction transforming with the oceans, to the benefit of human beings and the oceans themselves.

The International Seabed Authority will oversee the new system by next year, a system approved both as the first project to mine the deep ocean floor off the west coast of Mexico and as the real potential for human interaction transforms with the oceans
>> approved both ….as the real potential for human interaction transforms with the oceans
You can say approve X(noun) as Y(noun). But here in the second part a verb “transforms” is present. Hence option A is incorrect.

(B) Approving the first project off the west coast of Mexico, the International Seabed Authority will realize the potential for transforming human interaction with the oceans, overseeing the new system to mine the deep ocean floor by next year
>> will oversee/will approve make more sense. The authority has already realised the potential. Which is why the are going to approve the project. Here ‘will realise doesn’t make any sence. Hence option B is incorrect

(C) With the new system overseen to authorise mining the deep ocean floor, the International Seabed Authority is expected to approve the first project by next year to do so off the west coast of Mexico, where potential for human interaction transformed with the oceans is very real
>>Transformed is incorrect . The event hasn’t already happened. Hence the use of past participle is incorrect.
Hence option C is incorrect


(D) It is expected that by next year the International Seabed Authority, approving the first project to do so off the west coast of Mexico, will oversee the new system to authorise mining the deep ocean floor; the potential for which human interaction with the oceans transforms is very real
>>There is no sensible antecedent for ‘for which’.
Also the potential for …transforms…is incorrect…it should be the potential for transforming.
Hence option D is incorrect.

(E) Overseeing the new system to authorise mining the deep ocean floor, the International Seabed Authority is expected to approve by next year the first project to do so off the west coast of Mexico; the potential for transforming human interaction with the oceans is very real

>>Overseeing the new system to authorise mining the deep ocean floor, the International Seabed Authority (noun modifier followed by the correct subject) is expected to approve(correct indication of a future event) by next year the first project to do so off the west coast of Mexico; the potential for transforming(usage in option D corrected) human interaction with the oceans is very real
Hence Option E is the correct option
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Look at the casual way choice A has been transcribed. There is some confusion between the transforming in the stimulus and transforms in the choice. How would one like to look further at all?
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