Chance for Smog Check Compromise Seen : Environment: EPA threatens to withhold highway funds if California fails to overhaul its vehicle testing system. Officials want to reach an agreement before sanctions are imposed.

On one side are federal bureaucrats unleashed by President Clinton’s feisty new environmental leader and eager to send a stern message to a stubborn, smoggy state. On the other are California politicians of both parties reluctant to alienate motorists and thousands of small business operators.

In a high-stakes game of chicken that is shaping up to be one of the nastiest confrontations spurred by the federal Clean Air Act, state legislators and the U.S. Environmental Protection Agency have been unable to reach an agreement over how to overhaul California’s embattled Smog Check program.

But even as the federal government continues to threaten economic sanctions against California, and state lawmakers keep talking tough, political leaders Wednesday said a chance remains for compromise. Neither side could offer even the outlines of what such a compromise might be.

The legislative session ends on Sept. 10, and there is little chance of the Legislature passing a bill by then.

U.S. Environmental Protection Agency Administrator Carol Browner has directed California to revamp its smog check program by imposing a system in which motorists would have their vehicles smog-tested every other year at one of perhaps 200 centralized smog check stations.

If the state fails to comply, EPA and U.S. Department of Transportation officials say they will freeze federal highway construction funds, a sum that could reach $1.75 billion annually. The EPA has given the state until Nov. 15 to pass an EPA-approved bill before the penalties are imposed.

To many, the fight over smog checks has more to do with political turf than fixing exhaust-belching cars. Both sides say they know the best way to improve California’s faulty program and, so far, neither has budged much.

The political stakes are high: California’s 54 electoral votes are important to President Clinton’s reelection chances and imposing sanctions on a recession-plagued state would be unpopular.

“It’s the EPA’s credibility versus Clinton’s reelection,” said one state Capitol source, a Republican partisan. “We would be very surprised if the President sanctioned the state at a time when the state is reeling from the recession. I just can’t see it.”

For Browner and her aides, however, the directive to California is especially important. If California fails to comply, 23 other states with smog problems could also try to evade new Clean Air Act requirements.

Although some lawmakers say they are ready for a fight, Sen. Robert Presley (D-Riverside), who is pushing the EPA plan, believes the state will have time to come up with a plan even after the deadline passes. He said the federal government might need six months beyond the Nov. 15 date to enact sanctions. That would give state lawmakers time to prepare a compromise and present it upon the Legislature’s return in January.

“They are only going to impose sanctions if we force them to,” Presley said. “We ought to resolve this. That’s what we’re elected to do.”

“This is something that can be resolved,” said Dan Schnur, communications director for Gov. Pete Wilson. “The EPA proposal is not in California’s best interest, but the opportunity exists to come to some kind of agreement.”

In the Legislature, the matter is headed for a conference committee, most likely including Senate Transportation Chairman Quentin L. Kopp, a San Francisco Independent, and Assembly Transportation Chairman Richard Katz (D-Sylmar), both of whom back the decentralized system with enhancements.

The EPA wants the Legislature to replace the network of 9,600 privately owned smog check stations with the centralized system, run by private companies and overseen by the state. Cars that fail the tests would go to independent mechanics to get their faulty emissions systems fixed.

Much of the legislators’ refusal to go along stems from concern that restructuring the program would put hundreds of small service station owners out of business and inconvenience motorists.

The EPA contends that under the current system, service stations have an embedded conflict of interest. They could be tempted to approve polluting cars of their regular customers to keep them happy, or they could fail cars to get the repair business.

The EPA has already compromised once, by agreeing with a Presley plan that would require centralized test stations but allow motorists to go to any repair shop for a retest.

The confrontation comes as the state continues to violate the Clean Air Act. It has failed to meet the federal health standards in the Los Angeles Basin for two decades, and the air remains the most polluted in the nation.

The new strict regulations stem from a 1990 overhaul of the Clean Air Act sponsored by Rep. Henry Waxman (D-Los Angeles). In an interview, Waxman said that although the legislation does not specifically require a centralized system, he believes the only way to clean the Los Angeles Basin’s air is to crack down on older, heavily polluting cars in a centralized system.

Waxman said he was encouraging the EPA to crack down on California with sanctions.

Presley’s bill to create a centralized system of smog testing stalled in the Senate Transportation Committee Tuesday night, and a bill by Sen. Newton Russell (R-Glendale) to keep the current system in place was approved.

Russell’s bill, supported by service station owners and Gov. Wilson, moves to the Senate Appropriations Committee, which Presley chairs, and where it likely will die.

Wilson is the major proponent of the current system, although he also is pushing for enhancements. However, his aides as recently as last September advocated a centralized system, and as a U.S. senator in 1990, Wilson voted for the Clean Air Act, helping cement his environmentalist credentials as he planned his gubernatorial run.

Now, however, the Wilson Administration contends that a centralized system of vehicle smog testing would inconvenience motorists, cost too much and put service stations out of business.

Browner told The Times last month that the EPA has little choice but to take a tough stand. If the federal government does not act, environmentalists likely will sue to force compliance with the Clean Air Act.

“Our door is open,” she said. “We’re willing to work with them, but if they don’t act, we will have to” impose sanctions.