The principle in the stimulus is: "citizens need not refrain from actions that fail to comply with the law if they have made a good faith effort to comply but are prevented from doing so by government inaction."
The local group applied for the permit they required well in advanced and satisfied all the requirements. Thus, they had made a good faith effort to comply, but were prevented from doing so by government inaction. Thus, they need not refrain from actions that fail to comply with the law.
Similarly, in answer choice (E), the physician met all the qualifications for his license and still had not received it a year after he had applied for it. It's true that we do not know how long it normally takes to receive one of these licenses, however, common sense would say that such a license shouldn't take more than a year--and none of the other answer choices come close to complying to the principle. Thus, we can infer that the physician has made a good faith effort to comply but has been prevented from doing so by government inaction.
If it takes two years to process an application, then yes, answer choice (E) would no longer work. However, you don't want to look at the answer choices that way, i.e. how can I make this not work or how can I make this work? Though we do not know how long it takes to receive one of these licenses, it's logical to infer that a year is an adequate amount of time for a medical license.
Hope that was helpful! Please let us know if you have any other questions.
