State Warned to Revise Smog Checks : Pollution: EPA chief Browner says $750 million in funding will be withheld unless the vehicle-inspection program is revamped. Lawmakers remain defiant.

Environmental Protection Agency Administrator Carol M. Browner on Thursday issued a potent threat to California lawmakers debating the overhaul of the state’s vehicle-inspection program, saying the EPA will withhold up to $750 million in federal highway funds unless California adopts a program acceptable to her agency.

Two days after the state Senate’s Transportation Committee rejected a smog check program endorsed by the EPA, Browner said Thursday that alternative bills on the Assembly’s docket “are simply not good enough.”

In a telephone interview with reporters, Browner said that if the California Legislature adjourns next Friday without adequately dealing with the issue, she will start a process to impose federal sanctions on the state for failure to comply with the Clean Air Act.

Under that process, the California Legislature would have two to three months upon its return to work in January to pass legislation acceptable to EPA. If legislators failed to do so, California’s share of federal surface transportation funds would be cut off sometime early in 1994.

California lawmakers remained defiant Thursday, expressing disbelief that Browner would pick a fight with a state so politically important to the Clinton Administration. But a senior White House official confirmed that Browner had the President’s full backing in lodging her threat. And Browner, apparently intent on demonstrating the Administration’s resolve, dug in.

“If the Legislature adjourns without having passed a program that meets the standards we have told them they need to meet, then we will move forward, unequivocally,” Browner told reporters from her office in Washington. The clock will start ticking “eight days from now if the Legislature hasn’t acted,” she said.

If Browner follows through, the sanctions would be the first imposed on an entire state under the Clean Air Act since the law was substantially amended in 1990, and would mark one of the broadest uses of sanctions in the 30-year history of federal clean air legislation.

Browner’s threat comes after long-simmering dispute between Washington and Sacramento over the shape and scope of the state’s vehicle inspection program, a central component of California’s efforts to comply with federal clean air standards.

Since the bulk of air pollutants are from vehicle exhaust, EPA has taken an active role in ensuring that state inspection programs are adequate. Indeed, the agency has threatened sanctions once before, in 1980, as lawmakers debated the provisions of the state vehicle inspection program that is now in place.

In the current dispute, California lawmakers have favored a system of inspections that would retain a decentralized network in which vehicles are checked and, if necessary, brought into compliance with state standards at some 9,600 privately owned service stations across the state.

The Clinton Administration and a minority of California lawmakers, citing the risk of fraud in such a system, favor a centralized network of state-run inspection centers, with provisions allowing motorists whose vehicles fail the inspections to get repairs and certification at an accredited service station.

Gov. Pete Wilson and many state legislators believe that a centralized system of vehicle smog testing would inconvenience motorists, cost too much and put service stations out of business.

Moments after Browner concluded her remarks Thursday, the chairs of the state Senate and Assembly transportation committees and others announced that they would amend a smog check bill moving through the Legislature. New wording would require the state to switch to the EPA-backed centralized system by 1998, but only if the current decentralized system fails to meet clean air standards by December, 1995.

The bill, by Sen. Newton Russell (R-Glendale), has bipartisan backing, as well as Gov. Pete Wilson’s support. It could pass the Legislature by the session’s close next Friday.

Russell’s bill would require the state’s 9,600 smog check operators to purchase new, more sensitive equipment for their smog tests, and would increase fines and penalties for the worst polluting cars and for service station operators who give fraudulent smog test approvals.

But Browner appeared skeptical Thursday that Russell’s bill would satisfy EPA’s demands and avert sanctions. “We have yet to see a program that doesn’t use private, independent testing facilities . . . that gives us the level of protections, the level of accuracy that people expect,” she said.

Browner added that the sanctions contemplated by the Administration would not affect $750 million to $900 million in federal funds that are used by the state for highway safety programs and the development of alternative means of transportation--such as Metro Rail and light rail. But highway construction funds, which account for between $600 million and $750 million of the federal funds involved, would be shut off if she follows through on her threat.

At the same time, however, Browner took pains to portray the EPA as flexible and willing to negotiate to head off the sanctions.

“I would like nothing better than to work this out, to work with the people of California to make sure they have a program that works for them,” Browner said. “But the law is very clear about what happens if they don’t. If we get a call tonight or tomorrow morning, we’ll have people out there fully prepared to discuss this. We will continue to be available to work with anybody.”

Several state legislators privately stressed that they believe some compromise is possible--if not in the coming week then early in the next session. But they were clearly irked at what they perceived as the federal government’s intrusiveness.

“If they’re dying for a fight, then so be it,” said Assemblyman Richard Katz (D-Sylmar), chairman of the Assembly Transportation Committee. “I refuse to be intimidated . . . just to make a bureaucrat in Washington, D.C., happy.”

In recent days, several lawmakers have made reference to California’s 54 electoral votes, and their key role in Clinton’s election.

While Clinton Administration officials acknowledged their political debt to the state, they stressed the rigors of the Clean Air Act and stressed that Browner had offered an olive branch.

“We’re not looking to pick a fight with California,” said Tom Epstein, special assistant to the President who handles California political affairs. “We’re looking to enforce the Clean Air Act to the same standards as it is around the country,”

Healy reported from Washington and Morain from Sacramento.