Breathing room.

CALIFORNIA FACES DOWN THE EPA OVER CENTRALIZED SMOG CHECKS.

Some people are easy to trust. When someone carefully explains what he means, listens to your doubts and confusions, and painstakingly meets every inquiry with a well-informed, evenhanded response, you can't help but trust him.

That's how it is talking to Douglas Lawson, a major contributor to the study of air pollution. Lawson is one of those earnest, "but-wait-there's-still-a-problem-here" type of guys. While he worked for the California Air Resources Board, the state's lead smog agency, he turned over stones--quite by accident at first--that others preferred left unturned. Then he scrupulously pursued his findings. Now he's at the center of a raging scientific debate, which in turn fuels a raging policy debate, which in turns fuels an ongoing public debate about the competence and integrity of the Environmental Protection Agency.

In California, the testing of automobile exhaust emissions-"smog check"--is decentralized. Thousands of private service stations perform emission inspections and offer to make any necessary repairs. Until recently, however, the EPA had been demanding that states centralize their smog-check programs by creating a small number of government-operated facilities responsible only for inspecting cars, not for repairing them. The EPA claims, with some evidence, that decentralized programs are more open to corruption and fraud than centralized programs. But after working out plans for new centralized programs in every other smog-check state, the EPA met massive resistance in California. This March, even after the EPA threatened to withhold federal highway money, California fended off the agency.

California's success is the start of a nationwide rebellion. Other states are already mustering nerve and repudiating centralized inspection. The battleground, however, goes far beyond smog-check issues. The science behind California's defiance also calls into question many related programs--such as alternative fuels, federally imposed engine-design standards, electric vehicles, and forced carpooling--that the EPA claims will reduce mobile-source smog problems. The real issue, then, is nothing less than the 1990 Clean Air Act and its enforcement by the EPA.

The EPA is at a crossroads. It can face up to the new findings by Lawson and others and take up new strategies for policing smog. But that's not an easy course of action for a massive organization that has invested tax dollars, political influence, professional expertise, and personal identities in the promotion of elaborate programs. The other option is to stay the course and put the screws to all insurgents. But then the EPA and the Clinton administration will face rebellion on all sides and end up in court with reasonable people like Doug Lawson picking apart the agency on scientific grounds.

When Lawson first came to the California Air Resources Board in 1980, smog issues were relatively quiet. Researchers performed two basic tasks. First, they estimated the amount of each pollutant emitted into the air, basing the estimates--called "inventories"--on measurements of stationary and mobile sources. Then they theorized how pollutants mixed in the air to form smog gases such as ozone. For 20 years, the experts got their inventories and theoretical models to agree. Sensibly enough, the car-emission component of the mobile-source inventory was based partly on smog-check records. But since California smog checks are performed only once every two years on idling cars, they may not represent what moving automobiles actually emit the other 729 days of the biennium.

In 1987, Lawson was responsible for a study of real-life car emissions. The objective was to investigate not regulated pollutants such as carbon monoxide, hydrocarbons, and nitrogen oxides but unregulated gases such as benzene, formaldehyde, and other carcinogens. Lawson's group set up equipment that took readings of the pollutants in the open air that entered a tunnel in Van Nuys, California, and compared them to measures of the air exiting the tunnel after so many cars, for so many minutes, had contributed exhaust emissions to the composition. Unfortunately, the tunnel study failed in its main objective because the tunnel was too short to obtain accurate measurements of the unregulated pollutants.

But Lawson's group stumbled onto something it wasn't looking for: The regulated-gas readings were reliable but far out of line with expected levels. The cars in the tunnel emitted 300 percent to 700 percent more hydrocarbons than expected and 200 percent to 400 percent more carbon monoxide. Only the nitrogen oxide readings were even close to the model inventories, and even they were much higher than expected. Either something was wrong with the tunnel study or something was wrong with official estimates, and Lawson wanted to find out which. Flaws in the tunnel study would have produced systematic discrepancies. Instead, the tunnel readings for hydrocarbons, carbon monoxide, and nitrogen oxides departed from the expected results by vastly different factors, suggesting that something was drastically wrong with the official estimates of automobile-exhaust emissions.

The tunnel study introduced the first of three great challenges to smog policy: Mobile-source emissions have been greatly underestimated. As a result, too much of the pollution has been attributed to stationary sources. Blaming stationary sources has helped to justify all manner of restrictions on sources such as oil refineries, manufacturers, print shops, dry cleaners, wood-burning stoves, and charcoal lighter fluids. The tunnel study findings, which have been substantiated in subsequent tests, suggest that too much regulation is aimed at nickel-and-dime problems.

Lawson figured that the Air Resources Board had to find out more about emissions as they really occur on the road. He had heard about a new device that measures carbon monoxide in exhaust from cars as they travel along the road. The device, called a remote sensor, had been developed by a chemist at the University of Denver, Donald Stedman.

If Doug Lawson is an unassuming Clark Kent figure, then Donald Stedman is Errol Flynn's Robin Hood, speaking treason, fluently, to the seat of power. In a 1993 letter to the EPA, the transplanted Englishman declared that the only way to get him to stop accusing the EPA of intransigent behavior was for the EPA to stop behaving intransigently. And he'd be happy to argue the matter in court.

Stedman's work on remote sensing started in 1979, when he and colleagues at the University of Michigan constructed a very crude device to measure car emissions. There was no research money available and little interest at the time, but the makeshift unit was to Stedman's mind a "proof of concept."

That concept was deceptively simple: An infrared source shines a beam across the road. The beam passes through a car's exhaust plume and is altered by the gases. A detector on the other side of the road receives the altered beam and can infer the carbon monoxide content in the exhaust plume. The sensor would later be modified to read hydrocarbons content as well.

But it was some time before Stedman could raise money to improve upon his early model. He had sought funding from the EPA's Mobile Source Division but got nowhere. After relocating to Denver in 1983, Stedman received funding from the Colorado Office of Energy Conservation, selling the office on the idea that a fully honed remote sensor could be used to alert motorists with dirty engines that a tune-up would get them better gas mileage. Stedman of course saw that the really important implications of remote sensing would be in smog policy, not energy conservation, but he relished the opportunity to pursue the project whatever the funding source.

Stedman and his colleague Gary Bishop, who wrote the software for reading the incoming infrared signal, went to work. By December 1986 they had the sensor on the road and, as Stedman puts it, "It worked better than we had any right to expect." Stedman and Bishop measured the emissions of 618 on-the-road cars. From that early, limited demonstration, Stedman tentatively concluded that, contrary to then-accepted theories, there was little or no necessary link between a vehicle's age and its level of emissions. The real variable was the condition of the engine. Eight years and one-and-a-half million cars (on four continents) later, those findings still stand.

In 1989, Lawson persuaded the Air Resources Board to do an on-road study using Stedman's device. Lawson and Stedman set it up in Lynwood, California, (just south of Los Angeles) and not only read the carbon monoxide of passing cars but flagged the gross polluters to check under the hood.

The Lynwood study advanced the two other major challenges to established thinking on smog. First: A majority of the pollution comes from a small minority of gross-polluting cars. Lawson and Stedman found that the dirtiest 10 percent of cars emitted 50 percent of the carbon monoxide, while the cleanest 50 percent emitted a mere 5 percent. The sharply skewed distribution of emissions casts traditional smog-check policy in an absurd light. Making everyone report for a biennial inspection is like making everyone spend a few days in jail for the crimes committed by just a few culprits. If there is a way to identify culprits and make only them report for engine adjustment, air quality could be improved at a fraction of the current cost of smog checks.

Therein lies the third great challenge, which since 1988 has been sending quakes through the air-policy establishment: Remote sensing indisputably works. Lawson and Stedman proved it in Lynwood by performing traditional smog tests on cars that had been flagged by the remote-sensor test and demonstrating that the two tests match. This and other methods have shown, time after time, that remote sensing makes accurate measurements of carbon monoxide and hydrocarbons.

In 1991 field research, Lawson, now at the University of Nevada's Desert Research Institute, and Stedman further debunked the myth of the dirty old clunker and substantiated that maintenance is more important than age when it comes to emission levels. But they also discovered another major source of trouble by looking under the hood of flagged cars: tampering with emission controls. About two-thirds of the gross polluters had emission-control systems out of conformance with the law, and a majority of those systems had been deliberately tampered with. Since the under-the-hood follow-up was voluntary, the figures probably underestimate tampering. Lawson and Stedman tell of the gross-polluting new Porsches that sped off as soon as they heard the words "not under obligation."

If tampering is widespread and causes high emissions, then a scheduled emissions inspection every two years is a waste of time and money. It is like combatting drunk driving by having people report for a biennial breathalyzer test. Existing remote-sensing technology, however, can automatically match a car's emissions to its license plate, and gross polluters can be sent a fine or a citation to report for closer inspection. Because of its extremely low cost (about 50 cents per car) and portability, remote sensing is capable of random but pervasive surveillance while inconveniencing only the guilty few.

Of course, it is one thing for researchers to make important discoveries and publish scientific articles. It is quite another thing for state officials and lawmakers to recognize new developments. That is where a charismatic L.A. deputy district attorney named Joseph Charney has made a big difference. Stedman says that Charney has been enormously influential, first by utilizing remote sensing in actual smog busts, but more so by his tireless promotion of the technology in political circles. Furthermore, says Stedman, Charney is a genuine environmentalist. As a student in the 1960s, Charney leaned left-ward and took up law as a way to serve the poor and environmental causes. In his late 30s, however, Charney came over to "free-market environmentalism" and is now an avid reader of economist and social philosopher F. A. Hayek.

Charney learned about Stedman's remote sensor from early coverage in REASON. (See "Going Mobile," August/September 1990.) Co-workers in the environmental crimes division of the L.A. County district attorney's office had long suspected that smog checks weren't working, but no one knew how to ferret out dirty cars. "I saw immediately that remote sensing would be the missing piece," says Charney.

Another convert to remote sensing in 1990 was Republican Rep. Joe Barton of Texas, who sits on the House Energy and Commerce Committee. He read a Wall Street Journal article by Stedman that trashed oxygenated fuels and promoted remote sensing. Barton, who has a master's degree in engineering, got excited about the idea and contacted Stedman. Then the congressman had a remote sensing clause included in the 1990 Clean Air Act. This stroke was crucial--now remote-sensing supporters could hope to persuade the EPA to favor remote sensing in its enforcement of the Clean Air Act. And if the agency failed to pursue the technology, they could claim in court that the EPA was straying from its mandate.

Meanwhile, Lawson was exploring the extent of the failure of smog checks. After the Lynwood study, he realized that the old orthodoxies about mobile-source emissions would never stand up to empirical analysis. "I said to myself," he recollects, "I bet the data of on-road emissions have never been carefully analyzed."

Lawson took the Air Resources Board's data from hundreds of on-road emission readings and searched for a relationship between the emission levels and the time since the car's last smog check. If the smog-check program was making cars clean, he reasoned, then the typical car would get progressively dirtier with the passage of time since its last smog check. In fact, the data showed nothing of the kind. On average, cars that had recently passed smog checks were just as dirty as cars soon due for inspections.

Tampering by motorists was only part of the explanation. Charney's people were tracking another significant contributing factor: fraudulent smog-check inspectors. Armed with binoculars and video cameras, the deputy district attorney's team staked out service stations that performed smog checks, recording incoming and outgoing cars. They compared their observations with the state's on-line smog-check records of when the stations tested cars. Station records showed testing when no such car was observed at the station. Crooked smog inspectors would receive registration information by fax about a car seeking smog certification, enter the information into the system, and do the tailpipe test on a house car, a practice known as "cleanpiping." Charney's division busted more than 40 smog inspectors for faking smog checks.

From the cleanpiping records, Charney picked up the trail of the Bell Cab company, the recipient of many fraudulent certificates. Using a Stedman remote sensor leased by the Air Resources Board, Charney monitored taxicab emissions at Los Angeles International Airport. Bell's cabs were filthy; subsequently, Charney raided the company's office and verified emission-control device tampering. Charney is currently pursuing used-car dealers in similar fashion. "You could probably show that Charney has done more to clean the air in L.A. than smog check has in the same period," says Stedman.

Smog checks, then, weren't failing just because of bad science. They were also incapable of guarding against all kinds of fraud, including tampered engines, bribed inspectors, and cleanpiping scams. By 1992, everyone agreed that California's decentralized smog-check program was an abject failure.

But they disagreed bitterly over what to do about it. Nationwide, the EPA was pushing hard for centralized inspection that would separate the testing and repairing functions. Air Resources Board officials backed a modified centralized scheme proposed by their consultant, Sierra Research (no connection to the Sierra Club). And, not surprisingly, California's 9,000 practicing smog-check stations lobbied for preservation of the current system.

Then there were the skeptics such as Charney, Lawson, and Stedman. "Arguing over whether we should have centralized scheduled inspection or decentralized scheduled inspection is like arguing over whether we should paint the equipment blue or paint it green," says Charney. Instead of trying to somehow salvage the current system, a quickly emerging band of revisionists pushed for a complete rethinking of smog-check policy. With the results of Lawson and Stedman to lean on, they proved to be remarkably effective.

California's smog-check program had been designed by the Air Resources Board under the leadership of Thomas Austin, who left the agency in 1981 to form Sierra Research. In 1992, Sierra was hired to write the Inspection and Maintenance Review Committee's report, which endorsed a modified centralized inspection scheme. The board supported Sierra's pitch to reinforce scheduled inspection and downplay remote sensing.

California lawmakers pondered whether to follow the Air Resources Board-Sierra proposal or to second-guess the state agency. Revisionist notions were reaching state legislators, notably from Buzz Breedlove at the California Research Bureau. In 1991 Breedlove had written a powerful report advocating remote sensing. Stedman says that Breedlove was very important in sowing the seeds of doubt in Sacramento. The legislature was also growing leery of the cozy relationship between the Air Resources Board and Sierra Research.

The state Senate Transportation Committee decided to second-guess. Lawson appeared before the committee and recommended that a "blue-ribbon" panel be formed to study his findings and those of Sierra. The Senate committee took Lawson's advice. Among the blue-ribbon members were Charney and University of California at Irvine economist Charles Lave, who was to produce a research report. Additionally, the Senate committee hired the RAND Corporation to report on the alternative smog-check systems.

Things went badly for the Air Resources Board and Sierra. Not only did both Lave and Jerome Aroesty of RAND confirm Lawson's findings, they also concluded that the Air Resources Board-Sierra study lacked both evidence for the effectiveness of their proposed program and grounds for downplaying remote sensing. The Air Resources Board-Sierra report, it turned out, relied on a major undercover study also carried out by those same groups. Lave and Aroesty found the study very poorly designed and documented, even to the point that it surreptitiously departed from its reported protocol.

Sierra was disgraced, and the Air Resources Board was chagrined. The negative reports led the legislature to bypass the Air Resources Board in ensuing deliberations, listening instead to revisionist voices such as Charney and Lave. The smog-check skeptics were making good headway in California at the state level, but there was still the EPA to contend with.

Lave's and Aroesty's findings criticized not only the Air Resources Board-Sierra scheme, but the EPA's centralized scheme as well. Lave proposed that the state postpone major changes except to supplement the current program with remote sensors. The California Senate supported a bill sponsored by Republican state Sen. Newton Russell that reflected Lave's advice: It included preservation of the current system, a new deployment of remote sensing, and the building of a few special test-only stations. Such a system combining remote sensing with the status quo was in open defiance of the EPA's push towards centralization.

Remote-sensing enthusiasts and the 9,000 licensed smog inspectors have formed a cool alliance. In the near term, they are united against centralized inspection. But looking ahead, the inspectors have mixed feelings about remote sensing. Charney has told smog-check operators that if the government can identify and punish on-road gross polluters, it will leave inspection and maintenance to unregulated private-sector action. "The government should police outputs, not inputs," he says. "If remote-sensing moves forward without serious hitches, the government should reevaluate the need for scheduled inspection." If a remote-sensing program shows scheduled inspections to be unnecessary, the smog-check stations would lose that end of the business. They would, however, gain business in repairing dirty cars detected by remote sensing.

In late 1993, the EPA and the Clinton administration played tough with California, threatening to withhold highway funds. But it became evident that California would test the threat. EPA chief Carol Browner backed off. When the Assembly passed its version of the Russell bill, Browner struck a deal with the Democratic leadership of the state Senate. She said that if the Senate sat on the issue until the new year, the feds would defer sanctions. Browner was hoping to buy some time, or perhaps to dissipate revisionist momentum.

When the legislature reconvened early this year, however, the state stuck to its guns. And before the EPA could even consider punitive sanctions, the Northridge earthquake hit on January 17, collapsing several interstate highways in and around Los Angeles. Even as the extensive quake damage handed the EPA a huge bargaining chip, the Clinton administration realized that withholding highway funds would also alienate voters in the nation's most populous state.

So instead the EPA and California reached an accord in March described by the Los Angeles Times as a "substantial retreat" by the EPA. The agreement includes a pilot remote-sensing program for Sacramento County and a small number of test-only stations for inspecting gross polluters, tamperers, and a few regular motorists. As for the 9,000 licensed smog-check stations, except for possible equipment changes and new training, they will carry on as before.

By making the deal, the EPA may have doused the smoldering fire in California, but it certainly fanned the flames of resentment in the more than 20 states forced by the EPA to adopt centralized smog-check systems. After all, if California doesn't have to go centralized, why should they? Nevada and Georgia have already suspended their plans, pending further negotiations with the EPA. William Becker, director of a Washington-based organization of state and local air-pollution regulators, told the Los Angeles Times, "I've not seen a backlash on an issue like I have on this one. It was as if a tremendous shot was heard across the country."

On the federal level, members of Congress are organizing action against the EPA. With the ineffectiveness of traditional smog-check systems becoming widely accepted and the freezing of highway funds no longer a credible threat, the EPA has lost most of its leverage. Whether the EPA will surrender unconditionally on centralized inspection remains to be seen.

But the California accord is critical not only in the smog-check battle. It is also central to the much-larger war over the EPA's attempts to implement the 1990 Clean Air Act. Perhaps that's why the EPA has been fighting so harshly for centralized inspection and against remote sensing. The revisionist learning that argues against scheduled emissions inspection also argues against alternative fuel programs, electric vehicle quotas, engine-emission standards, and mandatory car pooling--all of which figure prominently in the EPA's current clean-air agenda. If remote sensing can pinpoint the real culprits at very low cost, the air-quality justifications for other broad-based command-and-control programs are vitiated.

Consider car pooling requirements. A regional regulation for greater Los Angeles requires large employers to promote car pooling. This has taken some cars off the road, but program costs are astronomical. The annual cost of getting one car off the road works out to $3,000. Using generous estimates of pollution from such cars, the program reduces carbon monoxide emissions at a rate of $11,700 per metric ton. By contrast, a remote-sensing demonstration project in Provo, Utah, reduced carbon monoxide for only $200 per metric ton. Dollar for dollar, remote sensing cleaned the air 60 times better than mandatory car pooling.

With the environmental and economic benefits of remote sensing gaining widespread acceptance, it is clear that the EPA has lost the smog-check war. It is no longer an issue of whether remote-sensing technology is superior to the centralized system espoused by the EPA. The only questions remaining are when the EPA and the Clinton administration will come on board and to what extent they will allow good science to guide air-control policy.

Lawson continues to produce scientific papers challenging established thinking and spurring modelers to make better estimates of smog inventories. True to form, he has recently demonstrated that the majority of cars that fail in the current smog-check program are only marginal emitters and that most of these marginal emitters actually increase their pollution emissions after their smog-check repairs. A new paper concludes that centralized testing is slightly better than decentralized, but neither is significantly better than no program at all--yet Californians currently expend half a billion dollars a year on smog checks.

Charney has formed a group, the Air Policy Council, to communicate scientific developments to policy makers; Lawson and Lave are members. Charney has also been nominated to serve on the committee overseeing the remote-sensing program for Sacramento County.

Stedman continues to blast the old guard and to refine his remote-sensing unit. Currently, he is developing a companion remote-sensing beam to read nitrogen-oxide emissions. With the EPA in retreat and his remote-sensing technology coming into vogue, Stedman pauses to muse over the EPA's current predicament: "I think it's hilarious."

Daniel Klein is assistant professor of economics at the University of California, Irvine, and co-author of the Lave report. Christina Saraceni is an economics student at U.C.-Irvine.