The correct answer is C) should pass well clear on either side of the buoy. This is because a white flashing light with a group of two flashes indicates a safe water mark, which means the buoy is marking safe navigable waters. Safe water marks can be passed on either side, and vessels should give the buoy a wide berth to ensure safe passage. The other answer choices are incorrect because: A) passing south of the buoy would unnecessarily restrict the vessel's movement, B) passing close to starboard would be an arbitrary and potentially unsafe restriction, and D) passing north of the buoy would also unnecessarily restrict the vessel's movement when the buoy indicates that the waters around it are safe to navigate.