[Note to reader:  This paper appeared as Policy Analysis, no. 249, February 7, 1996 from the Cato Institute.  The present text is close to the published version, but the Executive Summary of the Cato version has been omitted.]

How to Induce Motorists to Pollute Less:
Remote Sensing and the Policing of Outputs

by

Daniel B. Klein
dklein@scu.edu

I. Introduction

Automobile emissions-control policy is now in an exciting period of re-examination and reform. New learning has advanced understanding of the problem, and new technologies have expanded the set of solutions to consider.

It is now understood that ten percent of the vehicles generate over 50 percent of the on-road carbon monoxide (CO). The same is true of hydrocarbon (HC) emissions. These are gross polluters. As shown in Figures 1 and 2, in each case the cleanest 80 percent of cars -- the low and marginal emitters -- taken together generate less than 12 percent of the pollution.

Figure 1. Carbon Monoxide Emissions

Figure 2. Hydrocarbon Emissions

Furthermore, studies suggest that repairs significantly reduce emissions only for cars with high emissions. Repairs made to cars only marginally over their emissions standards do little to reduce emissions, and even often increase emissions.⁽¹⁾ Because of the extreme skewedness of emissions, and because most emissions reductions will come from the gross polluters, the chief task of a cost-effective program must be to focus on gross polluters.

A new device called the remote sensor appears to be capable of doing just that. An infrared beam is shined across the road. As a car passes along the road, the beam travels through the exhaust plume and is distorted by the gases. The sensor receiving the distorted beam can infer the pollutant concentrations in the exhaust. The device is very inexpensive and mobile and can be set up on many streets and highway ramps. If government can use this device to identify the minority of gross polluters, it can clean the air at low cost to the public.

Regulators are showing interest in remote sensing, but they have not yet recognized the full potential of this new technology. Much of the policy debate over Inspection & Maintenance ("Smog Check" in California) has continued in the old ruts of old programs.

For ten years the Smog Check program in California has required cars and light trucks to pass inspection every two years. Inspections are performed at approximately 9,000 private garages licensed by the state. This system has been unsuccessful. Some motorists get their gross polluting cars through Smog Check by tampering or bribing the private inspectors. Some station mechanics also tinker with some cars so they can pass the test without fixing serious problems. Some gross polluters remain unregistered, thereby avoiding Smog Check altogether.⁽²⁾ Furthermore, the program is more costly than it needs to be, as it requires all motorists, even the majority with clean cars, to incur the costs of obtaining a smog certificate.

Smog Check is unsuccessful because vehicle owners can anticipate inspections, and because they must past inspection only one day every two years. On the other 729 days of the biennium the motorist can drive a dirty car.

The U. S. Environmental Protection Agency agrees that programs like California's are less effective than they should be, but it has identified the problems differently. The EPA says that the program falls short because the private garages engage in both inspection and repair of vehicles. This, it believes, creates a conflict of interest for Smog Check stations and tempts them into corruption and malfeasance. The EPA has called for the separation of inspection and repair. In its proposed "centralized" program, cars would report every two years to one of a small number of central, contractor-run facilities for inspection, and if necessary would go to private garages for repairs. This proposed program design, in contrast to California's "decentralized" program, would probably reduce corruption and fraud, although the new facilities might operate in haste if they are rewarded for throughput. Also, the EPA has called for the utilization of more expensive testing equipment, called dynamometers, which are treadmill devices that run cars through a pattern of simulated stop and go driving. Although the EPA's centralized program has some advantages, its opponents have been effective in pointing out its serious flaws. The EPA proposal still allows motorists to anticipate the test, and hence some motorists might still tamper with their vehicles for the test, although doing so is more difficult for the EPA program than for the current program. Also, mechanics could make only superficial adjustments sufficient to pass the test, but not adequate to fixing underlying problems. More fundamentally, the program is extremely expensive in that all or most motorists would be required to report for inspection, now at less convenient facilities.

During 1993 California resisted EPA's demands, partly because its officials doubted that a centralized program would be much of an improvement over the current program, and partly because it recognized that with remote sensing on the horizon it would be rash to sink large new investments in anticipated inspection. The conflict between California and the EPA was resolved, if only temporarily, by a Memorandum of Agreement in March 1994. The Agreement includes a pilot project that compares different types of test-only equipment, a pilot remote-sensing study for Sacramento County, and calls for setting up centralized facilities with the capacity to test 15 percent of vehicles in nonattainment areas. As for the 9,000 Smog Check stations, except for possible equipment changes and new training, they will carry on as before.

The Agreement is only a temporary accommodation. The EPA may continue to favor centralized inspection, and has been promoting other command-and-control policies on California, like mandatory carpooling in the mold of Los Angeles' Regulation XV. In these days of ideological change, however, the EPA seems to be reconsidering its command-and-control agenda. However the politics works out, the advent of remote sensing may well represent a quantum leap in auto-emissions control. Its potential ought to be fully explored before any additional programs are brought on line.

This paper has two goals. The first is to explore the potential of remote sensing and to explain why, if it is really as good as it appears, it should lead us to overhaul auto-emissions policy. We are careful to elucidate fundamental economic principles and to show how they apply to our arguments. We lay out a detailed remote-sensing program for the greater Los Angeles region, and provide a range of cost estimates. The program would not satisfy current E.P.A. constraints for program type, but that is not our chief purpose. The proposal is a sort of ideal; it is a description of the most desirable program if remote sensing turns out to be a fully viable technology. We feel that this exercise of "looking ahead" is appropriate for the following two reasons: (1) Policymakers need a vision of where their efforts ought to be headed. Public discussion too often focuses on the near-term demands placed on policy-makers. We need to discern the forest from the trees. (2) Remote sensing has, at least to a good extent, already proven itself a viable technology.

Our second goal is to provide a near-term transition proposal. The near-term proposal, like most of our discussion, focuses on California and its need to reform the Inspection & Maintenance program. The discussion of the near-term proposal piggy-backs on the fuller discussion of the long-term proposal.

Much of our thinking is really just the informed application of fundamental economic principles. So let us begin with the founder of economics, Adam Smith.

II. Adam Smith Visits Los Angeles

Were the ghost of Adam Smith to come to modern-day Los Angeles, he would no doubt agree that the air is very bad and that government policy must control auto emissions. Furthermore, he would have some advice on how to do it.

Smith had explained in The Wealth of Nations that, as consumers seek various outputs in the marketplace, market processes arrange themselves to deliver those outputs. Provided that performance at the output stage can be effectively rewarded in the marketplace, such incentives will induce entrepreneurs to coordinate their activities, as though "led by an invisible hand," to promote an ultimate end "that was no part of their intentions." In the market we seek various outputs at the lowest prices, and we let entrepreneurs, interacting in spontaneous fashion, worry about the inputs.

When we go into a restaurant, for example, and order a crock of French onion soup, we specify only the desired output. We do not tell the chef how to slice the onions, grind the pepper or grate the cheese. We do not tell the restaurant manager where to get the ingredients, how to store them, or how to train the employees. Customers merely specify the outputs, and, as Adam Smith explained, entrepreneurs in the market attend to the inputs. Successful entrepreneurs are expert in the local opportunities for effectively combining inputs, and they compete for customers by seeking to produce the outputs that customers desire.

When it comes to air quality, however, Smith would readily recognize that reducing vehicle emissions is one of those desirable output goals that, as he put it, "the profit could never repay the expense to any individual [who should privately seek to achieve the goal]."⁽³⁾ Instead, the government, in its role of steward of the commons, must attend to the problem. But Smith's logic of incentives still applies: if technology permits, the government ought to address the problem by treating outputs directly, not by treating inputs.

Smith's market-based reasoning stands in sharp contrast command-and-control policies. These aim to achieve output goals by specifying inputs. Command-and-control advocates seem not to believe that, once outputs are specified, the market will respond to those incentives and arrange inputs appropriately. Adam Smith sought to enlighten the command-and-control advocates of his day. He said that every individual can, "in his local situation, judge much better than any statesman" in determining what inputs are most appropriate to producing his desired output. Smith notes the pitfall of command-and-control: "The statesman, who should attempt to direct private people ..., would ... load himself with a most unnecessary attention."⁽⁴⁾

Does Adam Smith's reasoning speak to the problem of vehicle emissions? Smith's market-based approach of treating outputs rather than inputs, presupposes, of course, that there is a practical way of monitoring and policing performance at the output stage. Fortunately, there is a way of treating emissions directly, namely, the technology of remote sensing. Smith would favor a system that penalized motorists directly for excessive emissions, and that otherwise left motorists and entrepreneurs free to arrange the inputs, appropriate to their "local situations," to prevent the receiving of penalties.

Just as one man's ceiling is another man's floor, a good or service might be an output in one context and an input in another. To clarify our meaning, a conceptual diagram for the Smog Check program is drawn in Figure 3. The state's output goal is fleet-emissions reduction. One of the processes it has pursued to serve this goal is the Smog Check program. The program calls all motorists to inspection; passing-the-test is, from the state's point of view, part of its production process. But from the motorist's point of view, the program creates the following output goal: passing the test. One way motorists or their mechanics serve this goal is to keep their cars running clean. But another way is to tamper with the car, to obtain temporary emission reductions, or to obtain a smog certificate illegitimately. Because these and other problems are common, we see that the connection between the state's goal and the motorist's goal is weak and distant. The state is mandating an input process that doesn't deliver. Furthermore, it is comparatively expensive.

Figure 3. Input-Output Diagram for Smog-Check Program

By contrast, a remote-sensing program would better connect state and motorist goals (see Figure 4). The state pursues its output goal by specifying a program, namely on-road remote sensors and a system of sending citations to gross polluters. For motorists, this program generates the following output goal: avoiding smog citations. We say that this program is output-oriented because, as will be argued later, the connection between the state's goal and the motorist's goal is strong and close. This program is very similar to the consumer who simply asks for a good bowl of soup and leaves the rest to the entrepreneurs. Furthermore, this program is comparatively inexpensive.

Figure 4. Input-Output Diagram a Remote-Sensing Program

Now consider the following thought experiment: Suppose that the Heavens performed a miracle, delivering to us a new technology that could perfectly and costlessly measure the actual total annual emissions that came from each individual car. With this gift from Heaven, it would then make sense for the government to use it and to charge for emissions. We would charge motorists for their depletion of clean air, just as we charge homeowners for their depletion of tap water or electric power. This heavenly arrangement for emissions would be the perfect output-oriented program, and its establishment would recommend the abolition of all other forms of auto-emission control. In reality, the Heavens have not interceded on our behalf. We do not have a miraculously perfect and costless technology. We argue in this paper, however, that remote sensing is a major step toward cost-effective emission control, and that it is time to think about how its effective deployment might render other auto-emission control programs obsolete.

III. A Market-Based Perspective: Treating Outputs Rather Than Inputs

Smog Check is an input-oriented strategy. Passing Smog Check is not directly connected to the desired output -- namely, reduced auto emissions -- but is rather an input in a process that, one would hope, produces the desired output. Let's explore Smith's philosophy further by explaining why it is wiser for the government to treat auto-emission outputs, using pervasive and unanticipated remote-sensing surveillance, rather then inputs, such as anticipated smog-check inspections. There are five fundamental points, and each is illustrated by actual experience from smog-check programs.

1. Strategies that specify inputs tend to be unrefined to individuated conditions, they tend toward a one-size-fits-all policy. Yet the technique for transforming inputs into outputs is not singular, but plural. Every motorist has his own distinct opportunities for getting his car to run clean. And, in the absence of input regimentation by government, the entrepreneurship of the market would discover better ways to keep cars clean. Required inspection by a certified station lays down a blanket procedure for getting cars clean, a procedure that forsakes special opportunities and diverse conditions, and chokes off entrepreneurial creativity.

Smog-check experience: The smog-check program forces most motorists to participate in a biennial practice that they may not need. About 70 percent of motorists have clean-running cars for all relevant pollutants, but most of them must participate in an input ritual (Smog Check) that is potentially appropriate only for the other 30 percent of cars.⁽⁵⁾ And for motorists within that dirty 30 percent, they might be able to make their cars clean by obtaining proper and legitimate service from unlicensed stations or unlicensed inspectors. In the absence of input mandates, entrepreneurs would come up with better and less expensive ways of serving motorists' desires to avoid smog penalties.

2. A government program that specifies inputs runs the risk of specifying the wrong inputs. Government proceeds by the blunt forces of democratic and bureaucratic politics. Rather than relying on competitive market selection of inputs, government adopts an input strategies that may well be ineffective in producing the desired outputs.

Smog-check experience: California's Smog Check program has not lived up to its original promises. Independent researchers have given powerful evidence that I/M programs in general, whether centralized or decentralized, hardly have any smog-reduction benefits at all.⁽⁶⁾ Anticipated inspection at certified stations, it turns out, is a wrong input for producing cleaner emissions from the fleet.

3. Government input-strategies display very little ability to adapt to changing conditions. Unlike the free-enterprise market, which is driven to discover new combinations of inputs to produce the outputs that consumers desire, government procedures become locked-in and very difficult to restructure or dismantle.

Smog-check experience: Smog-check programs have become part of "the establishment." Because smog-check belongs to the status quo, it has become a focal point for discussion and planning. And as the status quo, it has created concentrated and well-organized interest groups that stand behind it, including both private Smog Check mechanics and entrepreneurs hoping to get the contracts for new inspection facilities.

4. A program that specifies inputs inevitably entails large administrative and bureaucratic costs for managing the program and policing compliance. If these efforts are inadequate, corruption, fraud, and malfeasance may become widespread.

Smog-check experience: It is well-known that corruption and fraud are common in decentralized programs;⁽⁷⁾ even centralized programs must attend to the diligence, competence, and honesty of the inspectors. Smog-check programs must attend to the training of licensed inspectors, the integrity of inspection equipment, the enforcement of honest inspection service, and evaluation of the program procedures. Corruption, fraud, and policing costs inevitably grow larger as government requirements reach deeper into the input stages of the production process.

5. The more that programs are connected only indirectly to public-interest goals, the more likely it is that they will be hijacked and led astray. Influential special interests, including regulators, are tempted to favor their own convenience in deciding which inputs should be adopted to produce the public-interest outputs. When policies treat outputs directly, it is much more difficult for interest-group tendencies to cloud and usurp the issue.

Smog-check experience: Debates rage over whether anticipated inspection can be a worthwhile input for producing cleaner emissions from the fleet. For example: Should anticipated inspection use dynamometers or less expensive equipment? If dynamometers, should they simulate loads over a continuous range or only at discrete loads? Should they report an emissions trace over the entire test or should they report only peaks and averages? And so on. Every interest group takes its place in the political process, and in doing so often obscures the fundamental issues. These politicized debates could be largely avoided if we had a strategy that dealt directly with outputs and was silent about inputs. The public-interest would then be better recognized and better served.

IV. Remote Sensing as a Feasible Technology for Treating Outputs

Accuracy of Remote Sensing

Any kind of test system makes two types of errors. A false failure occurs when the system identifies a clean car as dirty. False failures cause motorists to incur costs unnecessarily. A false pass occurs when the system identifies a dirty car as clean; false passes are undesirable because high-emitting cars are not cleaned up.

It is well-established that remote sensing takes a reasonably accurate snapshot of the CO and HC emissions from a car's tailpipe.⁽⁸⁾ The snapshot is perhaps a little blurry, if you will, but it tells us whether we gaze at an antelope or a vulture. What is still debated is whether snapshots provide sufficient evidence, as opposed to a dynamometer's motion-picture footage of the car's exhaust over a few minutes. We argue that remote-sensing snapshots are in fact quite adequate. Motion-picture footage is, after all, just a series of snapshots.

A problem with emission snapshots is that they might capture the car's emissions performance at an uncharacteristic moment. A simple case is the cold start: during the first few minutes it takes to warm up, every car produces high emissions. Vehicle emissions also vary with speed, grade, load, and acceleration. If there were no way to control for these factors, the usefulness of remote sensing would indeed be doubtful.

But remote-sensing technicians can counteract these factors. Officials can select sites removed from residences and parking areas, to eliminate the cold-start problem, and find road features or use orange cones to put narrow bounds on the grade, speed, and acceleration variables. Remote sensing is most accurate when it reads cars under light acceleration, so a mild incline would be a benefit. If site selection is not enough to eradicate variation in driving modes, we can measure speed and acceleration using radar, and we can detect the cold start using infrared cameras.

In one remote-sensing study, cars that had been read by a remote sensor were pulled over and given a regular smog check on the spot. Of cars that had exceptionally high CO readings (above 4 percent), 91 percent failed the smog test.⁽⁹⁾ Other studies have replicated this high correlation,⁽¹⁰⁾ and further developments would surely make the match even closer. Snapshots and motion-picture footage get the same story.

Errors Must Be Construed on a System-wide Basis

A report on California's smog check program (Sommerville, p. 129) presents information on how likely it is that a remote sensor will wrongly identify whether a car is clean or dirty. Let's say the sensor identifies a car as dirty if it reads the CO emissions as exceeding 4 percent of adjusted emissions. For a car in the set of clean vehicles, with "clean" defined in the study, there is, on average, less than a one percent chance -- 0.64 percent, to be exact -- that it will exceed this 4 percent "cutpoint" at a single reading. For a car in the set of dirty vehicles, there is, on average, a 66 percent chance that it will not exceed the cutpoint at a single reading. If we have to go on merely a single snapshot, it seems that we have to accept a lot of false passes. Alternatively, we could reduce the false passes by lowering the cutpoint, but doing so would then increase the false failures.

Fortunately, we do not face such a harsh trade-off. Instead of thinking of the errors in a remote-sensing program on the basis of a single snapshot, we should construe errors on a system-wide basis of multiple snapshots. Remote sensing is a remarkably inexpensive test -- figure a conservative estimate of 75 cents per test -- so we can multiply the remote sensors on the roads and use a pass/fail criterion based on a pattern of readings.

Consider, for example, a remote-sensing program for greater Los Angeles such that over a biennium the average number of readings for the entire fleet were eight. (Here we use summary figures for a scheme that is fully developed later.) Cars that traveled more than average would be read more than eight times, and cars that traveled less would be read less than eight times. Now suppose that we use a standard that fails a car if it exceeds the 4 percent CO cutpoint at least once over the entire biennium. A clean car, tested eight times, stands (on average⁽¹¹⁾) a 95 percent chance of never exceeding the cutpoint. That's a 95 percent chance of remaining undisturbed, which, unless it be a new car, is 95 percent better than its prospects under the current program! A dirty car, read eight times, stands (on average⁽¹²⁾) a mere 3.5 percent chance of not exceeding the cutpoint and getting away with a false pass over the course of the biennium. On a system-wide basis, the program commits few false failures and few false passes!

Remote sensing is a little less accurate at reading HC emissions than it is at reading CO emissions, but again the issue in not one of pin-point accuracy. As researchers at Resources for the Future have put it: "The remote sensing [single-]test identification rate is not a critical determinant of the effectiveness of remote sensing -- it is important only that super polluting vehicles can be identified by the test."⁽¹³⁾ By increasing the cutpoint we can reduce the number of false failures, and by increasing the number of tests per year we can reduce the number of false passes.

Moreover, the margin of error can be further reduced. The straight cutpoint criterion just presented is in fact very crude. The system would accumulate a wealth of information, and more powerful and more precise criteria could be developed. Consider the case of a salesman who travels all over Los Angeles in his clean car. He travels so much that his chance of exceeding the 4 percent CO mark during the biennium is greater than the 5 percent implied above. But for this motorist the system will have registered numerous clean readings, and on that basis can pardon a single dirty reading. A criterion might say, for example, that three clean readings cancel a single dirty reading. Or it can forgive first offenses, or evaluate on the basis of running averages rather than cutpoint levels. It can blend the readings for the different pollutants into a composite variable. It can scan for engine behavior that alternates between running clean and running dirty (sometimes called "flipper" behavior). It can adjust for the measured speed and acceleration of the vehicle at the moment of emissions readings. It can take into account the age or model of the vehicle. And so on.

The Outputs that Remote Sensing Does Not Measure

Thus, policymakers can follow Adam Smith's advice of policing CO and HC at the output stage. But are CO and HC the only outputs that matter? Are there other emissions that in fact we cannot treat with remote sensing at the output stage, and hence need to treat with smog-check inspections?

Nitrogen Oxides (NOx)

In fact, CO and HC are not the only outputs we care about. Cars emit many other compounds, some of which are regulated and most of which are unregulated. Another important regulated pollutant is nitrogen oxides (NOx). Two manufacturers of remote sensing (Remote Sensing Technologies Inc. and The Hughes Santa Barbara Research Center) have developed sensors capable of reading NOx emissions. The accuracy is not as good as that for CO or even HC, but it is certainly good enough to detect high emissions of NOx. Higher emitters of NOx emit more than 3000 ppm, and low emitters emit less than 1000 ppm. Each of the two manufactureres reports that its NOx readings, at least in prototype, are accurate with a standard deviation of 500 ppm. Hence the sensor is should be capable of separating high and low emitters.⁽¹⁴⁾ Both Remote Sensing Technologies and Hughes now market remote sensors that measure all three pollutants, and they say accuracy will improve with further development.

A more fundamental question about NOx is whether being able to measure NOx really adds much value to what we can accomplish with the ability to measure CO and HC. The answer appears to be, "yes." The automotive malfunctions that generate excessive NOx emissions sometimes also produce excessive CO and HC emissions. Hence, to some extent cracking down on the CO and HC culprits also means cracking down on the high NOx polluters. For example, in a study conducted in Michigan in 1992, 37 vehicles with high on-road emissions of CO and HC were identified by remote sensors and were recruited for repairs.⁽¹⁵⁾ After repairs were made, the CO emissions declined by 95 percent, the HC emissions declined by 92 percent, and the Nox emissions declined by 56 percent. These results, although from a small sample, give some encouragement. But we do know that most of the worst NOx-emitting cars do not have high CO or HC readings. For that reason, we should plan on utilizing remote sensing to read NOx emissions, as well as CO and HC.

Evaporative Emissions

Another source of noxious outputs is evaporative HC emissions. These occur, for example, when gasoline mixes with air in a carburator, when the fuel line has a leak, or, most simply, when the gas cap is missing. There is considerable debate over the magnitude of these types of emissions. Sommerville (1993, p. 97) claims that evaporative emissions account for over a third of the fleet's HC emissions, and the E.P.A. has suggested the evaporative portion to be as high as one half.⁽¹⁶⁾ These claims are based on laboratory tests of only a few vehicles and faulty estimates of the emissions inventory.⁽¹⁷⁾ More recently, scientists at the Desert Research Institute have studied the air in highway tunnels; subtracting out the measured HC emissions coming from car tailpipes, they find that evaporative emissions account for less than 20 percent of HC emissions.⁽¹⁸⁾ The tunnel studies do not consider, however, evaporative emissions that occur while a car sits parked with the engine turned off.

Evaporative emissions of the fleet are declining steadily as new engine technology has replaced older technology, particularly the replacement of carburators by fuel-injection systems. Evaporative emissions will decline further if fuel-tank vapor recovery systems come into use. It is conjectured that a significant portion of evaporative emissions results from missing gas caps. A simple strategy for addressing the problem would be to broadcast television messages to inform viewers that not having a gas cap costs them gasoline, fouls the air, and creates dangerous slick spots when gasoline spills onto the road.

Remote sensing does not read evaporative emissions, but it might help somewhat in reducing evaporative emissions nonetheless because these emissions are correlated with tampering and inadequate maintenance, and these in turn are correlated with high emissions of CO, HC and NOx. Motorists who are induced to reduce their tailpipe emissions will make repairs that, in some cases, also act to reduce non-tailpipe emissions. Also, if cars flagged by remote sensing are required to report for follow-up inspection, then these follow-up procedures might include a visual inspection for sources of excessive evaporative emissions.

A final reason that the problem of evaporative emissions does not argue against a pure remote-sensing program is that, if the problem is a chink in the armor of remote sensing, it is indeed a chink in the armor of any inspection system. Although the IM-240 protocol includes tests for evaporative emissions, these tests are time-consuming and of questionable effectiveness. There is even concern that in performing the tests (known as the "pressure" and "purge" tests), technicians compromise the functioning of the emissions control system and consequently cause evaporative emissions to increase.

Remote sensing, then, is not able to measure the full range of emission outputs that concern us, but its CO and HC capabilities cover most of the problem, and if NOx capability is added, even more. The other outputs not treated by remote sensing are relatively minor, or are not treated in a cost-effective manner by any other inspection program.

Will Scofflaws Learn to Foil Remote Sensing?

One of the chief reasons to favor an output-oriented policy is that, in leaving inputs unregulated, entrepreneurship is unleashed to the task of finding creative ways of producing what customers desire. There is one hazard, however. Strictly speaking, the output that a remote-sensing program sets for motorists is avoiding-smog-citations. It is possible that the process of entrepreneurial discovery will respond, not by cleaning up cars, but by foiling the system. Smog Check itself is an object lesson of this hazard. A pure remote-sensing program will yield emission reductions only if human cunning cannot find convenient ways of foiling its efforts. Although the only way to find out really if motorists can foil remote sensing is by experience, we can try to anticipate. We can see five basic approaches to foiling remote sensing. In discussing each case we will describe how the program can respond to the scofflaws. Before doing so, it is necessary that we briefly introduce an essential component of a sound remote-sensing program.

The remote-sensing program should deploy a small number of on-road pull-over teams. If a car exhibits a suspicious feature, the computer will blow a whistle or illuminate a light, and the car can be stopped on the spot. This on-road accost would not occur for mere gross polluters, but only for those also suspected of subterfuge or rank noncompliance.

The five methods of foiling remote sensing are as follows:

1. Obstructing the license plate, such as by splattering it with mud or putting a trailer hitch in front of it. This is a problem that could be easily policed by on-road pull-over. When the computer receives information that a car has an illegible plate and high emissions, it will blow a whistle in real time and the car is pulled over. Even without on-road forces, the problem could be combatted with elementary detective work using the video images of gross-polluting cars that have illegible license plates.
   
2. Keeping the car unregistered so the program is not able to identify the car and notify the motorist. This is a problem that is encountered by inspection programs of every kind. Again, the computer could be programed to blow a whistle and the on-road forces could easily be used to nab unregistered vehicles. For various reasons, however, we may wish to restrict apprehension of unregistered vehicles to those that are also high emitters.
   
3. Evading remote-sensing sites. This will be difficult for motorists because remote-sensing sites change by the day and are numerous and unnanounced. One could imagine motorists with CB radios alerting their fellows, but it is hard to imagine that this evasive action would be consistently effective. Some have suggested that radio stations might alert motorists to remote-sensing sites in their traffic reports, but we find it hard to believe that professional radio stations would engage in such open subversion. Most radio listeners, after all, are law-abiding citizens who oppose gross polluting. We could infer the extent of evasion by comparing the rate of high emissions at normal remote sensing sites with the rates at special stealth sites where motorists cannot tell that their car's emissions are being read. Also, we could gauge the problem of daily radio tip-off by comparing rates of high emissions during the first hour of operation at a site with the rate during later hours. If we found evidence of significant evasion we could step up numerous tactics to mitigate evasion.
   
4. Doing things to eliminate the exhaust plume as observed by the remote sensor, such as altering the tailpipe or turning off the car as it passed by a remote sensor. These tactics are expensive or inconvenient. Again, the computer could flag these cars for pull-over.
   
5. Tampering to alter the contents of the exhaust plume. This would require an additional gas source, to be mixed with the true exhaust, or perhaps an additive to the gasoline. More specifically, motorists might be able to foil remote sensing if they can make their car emit excessive carbon dioxide emissions, because remote sensing measures CO, HC, and NOx each as a ratio to carbon dioxide emissions. Increasing the carbon dioxide content would therefore disguise gross emissions of the regulated pollutants. This kind of tampering represents the only serious threat to th remote sensing program proposed in this paper. Whether it is a potent threat is unknown, but even if it is, program officials would employ their ingenuity in response, perhaps by devising a sensor for reading the absolute magnitude of carbon dioxide.

It appears that scofflaw tactics (1) through (4) pose no real threat to a program suited with on-road pull-over power. This power, even if exercised only seldom, would place a bitter check on subterfuge and would go a long way in controlling the problem of unregistered high-emitting vehicles. The accumulated record of license-plate snapshots that are taken concurrently with remote-sensing measurements would supply incontrovertible evidence in prosecution. Whether tactic (5) poses a serious threat is a question that deserves further investigation.

V. Recommended Features of a Remote Sensing Program

We discuss in turn the following six components of a good remote-sensing program:

1. On-Road Remote-Sensing Units
2. No Periodic Inspection
3. Citation By Mail
4. Enforcement by DMV and On-Road Pull-Overs
5. Early Driver Notification
6. Repair Subsidies to the Poor

On-Road Remote Sensing Units

The program should have numerous remote sensing teams which deploy themselves at random. They should not announce their siting plans, and should pick sites to minimize evasion, congestion, and problems with getting valid readings. Legislation should attempt to simplify and ease the process for obtaining site permits from state, county, and municipal authorities.

No Periodic Inspection

The program would deploy mobile remote sensing units in adequate number to read cars an average of four to eight times over the biennium. A basic question on everyone's mind is, Should remote sensing merely supplement universal periodic inspection, or should it replace periodic inspection?

Earlier we likened remote-sensing readings to snapshots and smog-check inspections to motion-picture footage. We have shown that, from a practical standpoint, each approach gets the same picture. There are however two major differences between them. First, the cost of decentralized smog-check inspection is about 60 times the cost of a single remote-sensing inspection.⁽¹⁹⁾ If we say that on average cars should receive eight snapshot readings over the biennium, then smock-check inspection is still seven times as expensive as a biennium's worth of remote sensing testing. Centralized inspections would probably be even more costly than decentralized inspections.⁽²⁰⁾

Second, Smog-Check's motion-picture footage captures behavior that is like a performance played out on a stage. Motorists can tamper for the Smog Check inspection. Some motorists today are like a crooked bank teller who sneaks into the bank vault and pinches some cash. When interrogated the next day the teller simply plays innocent. In the case of remote sensing, the snapshots captures behavior that is unvarnished and true to life. Violators are caught in the act.

Defenders of periodic inspection say that motorist deception will be combatted by remote sensing, which, as a program supplement, will discourage tampering between periodic inspections. That conclusion follows, but then we must ask: What does periodic inspection add to the surveillance achieved by remote sensing? If the bank had a video recording of the bank teller's actions, and could easily scan it to determine whether he had snuck into the vault, there would then be no point in also interrogating him about his actions. With remote sensors supplying frequent and unanticipated inspection, periodic inspection becomes an expensive redundancy. It is the pony-express service that accompanies electronic mail.

Citation By Mail

The program would issue citations by mail to motorists with high-emitting vehicles. We will discuss later whether these citations would impose a monetary fine or would summon motorists to follow-up inspection. For now, assume that the citation calls for some kind of redeeming action to be made within a time period, such as 21 days. Here we discuss some of the issues involved with citation by mail.

One concern is that some citations will not be properly received. Sommerville (p. 124) reports that about seven percent of vehicles in California are unregistered -- a problem for any inspection program. But for a large portion of these vehicles the registration has merely lapsed a few months, so a citation would be properly received. As for motorists who change residence and experience problems in receiving their mail, a smog program should treat the problem no differently than a credit card company does. People are held responsible for seeing that they notify others of their change of address and that their mail is properly forwarded.

Another issue is popular and political acceptability. Sometimes the idea of smog citation by mail is likened to photo-radar speeding citation by mail (a practice that has been used in Pasadena and Folsom, California, and Pleasant Valley, Arizona). But comparing smog to speeding is problematic. Current speed limits are not analogous to "smog limits." Virtually all motorists exceed speed limits on a regular basis, whereas only a small minority would exceed smog limits. Many Americans feel that speed limits are too low and that enforcement is rather arbitrary. When traveling on a major highway, in fact, traveling at 70 m.p.h. may be safer than traveling at 55 m.p.h., because speed variance is one cause of accidents.⁽²¹⁾ In contrast, owners receiving a smog citation would be guilty of a real and certain harm to society. As for the problem of "vicarious responsibility" -- that is, the driver not being the owner -- the problem is very minor in the case of smog: emissions do not depend on who is behind the wheel, unless the driver has very peculiar driving habits.⁽²²⁾ One difference that makes smog citation less acceptable than speeding tickets is that motorists have a speedometer to tell them how fast they are going, but they do not have a "smogometer." High emitters might feel that it is unfair to penalize them for their ignorance. This problem, however, can be mitigated by public-access remote-sensing facilities, warning notices, and low initial fines. Furthermore, the actually-enforced emission limits would be much higher than the legally enforceable emission limits -- proportionally much higher than is the case for speeding enforcement -- so actually-cited motorists would be on very shaky ground in claiming that their car was within the legally enforceable limits.

A recent article argues that photo-radar programs are on firm ground both constitutionally and evidentiarily.⁽²³⁾ As for public opinion, researchers have surveyed citizens on their attitudes toward photo-radar citations for highway travel and found that 60 percent approved while 35 percent disapproved.⁽²⁴⁾ If researchers find this much juridical and popular support for photo-radar, they are likely to find more support for remote-sensing smog citation.

Whatever the extent of public objection to remote sensing and citation by mail, the objection would mainly be based on a claim to privacy. Here the public must be made to recognize that remote sensing is a sort of social control mechanism, a mechanism to police good behavior, and that every type of social control mechanism -- whether it be the criminal justice system, the media, credit reporting, or gossip -- necessarily collides with privacy in at least a small way. That remote sensing represents a serious invasion of privacy is doubtful. The roads are public property and the government is the steward of the airshed. Checking discreetly whether individuals are abusing their access to these resources is not an "unreasonable search" or an intrusive act. One's exhaust emissions are hardly a matter of personal intimacy, and it is unlikely that the mere act of monitoring emissions would give motorists a sense of being invaded. As for preserving individual privacy within the household, smog citations would not specify the exact time and place of readings. They should, for example, specify the week during which the reading was made, and say nothing of the location. The exact information, including video images, could be made available upon request and used for dispute resolution.

Enforcement: DMV Records and On-Road Pull-Overs

What will induce motorists to comply with smog citations? There are two means of inducing compliance. First, under current state law the Department of Motor Vehicles can impose fines, deny vehicle registration, and impound vehicles that do not obtain the required smog certification.⁽²⁵⁾ In a remote sensing program, driver's licenses, vehicle titles, and registration could be frozen until fines are paid.

Second, by virtue of automatic license-plate readers, on-road units can easily identify and pull over rank noncompliers and impound their vehicles. Remote sensing is a means both of identifying gross polluters and of apprehending them. Current law in California requires the Bureau of Automotive Repair and the Air Resources Board to institute an on-road enforcement program which may include remote sensing.⁽²⁶⁾ A record of remote-sensing violations and noncompliance would certainly supply probable cause. Other states as well have laws that allow authorities to pull over "smoking" vehicles; the remote sensor is essentially a means of identifying "smoking vehicles," although the smoke may be invisible.

We envision the pull-over forces as merely the final enforcer. We do not envision them accosting the mere high emitter, the mere unregistered vehicle, the mere license-plate obscurer, etc. They would pull over only the high emitters who are also unregistered, have illegible license plates, have not complied with previous citations, etc. Thus, only the hard-core minority of problem will be subjected to on-road pull-over.

If we assume 25 pull-over teams, each working 260 days per year, seven hours per day, making three pull-overs per hour, all together they make 136,500 pull-overs per year, or 1.6 percent of the vehicle population. These would be the recalcitrant 1.6 percent who defy the law. Anyone who refused to comply with the program would face a large risk of pull-over.

The pull-over arm of a remote sensing program should be separate from existing police forces. The program ought to create its own "smog squad" that enforces only emissions violations, just as parking patrols enforce only parking violations. If smog pull-over activities have to depend on conventional police resources, control over enforcement becomes spread over multiple agencies and coordination becomes difficult. It may be difficult and undesirable to divert the conventional police from their other duties. Smog enforcers would better perform their duties if they are specially trained and specialize in their activities.

Early Driver Notification

An important feature of a good remote-sensing program is driver notification for motorists whose cars are within smog limits but are approaching the limits or showing deterioration. The state would invest in a post-card to notify the motorist that he may wish to service his car. The notification card would cite three good reasons for doing so: (a) helping to clean the air; (b) improving his gas mileage; and (c) reducing the likelihood of his being subject to future penalties. Early driver notification would be a positive service to the motorist, as well as a sort of warning. It would prompt some people to reduce their emissions preemptively, before being compelled to do so.

Evidence of the power of early notification comes from a remote-sensing demonstration project conducted in Provo, Utah.⁽²⁷⁾ Over the course of several weeks, researchers monitored emissions at highway off-ramps. One group of gross-polluting motorists were sent a friendly notice telling them that their car was dirty and that they could take advantage of free repairs to get them cleaned up. Some of them took up the repair offer, but the motorists relevant to our point here were those in the notified group who chose not to take up the repair offer. These motorists nonetheless showed subsequent emissions reductions of 28 percent. Merely being alerted to the fact that one's car is gross polluting can prompt one to clean it up. Part of this 28 percent reduction should be attributed to the natural tendency for motorists to clean up their dirty cars, but only part. A second group of gross pulluters acted as a control group, in that they were not sent any notices or invitations to repairs. High-emitters in this group showed the natural tendency toward reduced emissions to be only 14 percent. The difference between the reduction rates of 28 percent and 14 percent between the two groups -- that is, 14 percent of emission reduction -- indicates the potential of purely voluntary notification. In a "fully armed" remote-sensing program, early notification would act not only as a friendly notice but also as a warning.

The program should also extend a "notice of appreciation" to motorists with clean cars, perhaps after a series of readings has been compiled. This would serve to reassure the motorist of his clean status, and it would build good will with the public.

Repair Subsidies and Waivers

For reasons of equity, enhanced compliance, and political acceptability, it makes sense for the program to offer repair subsidies to the poor. Current California law provides for a High-Polluter Repair or Removal Account, to provide financial assistance to low-income people seeking to repair (up to $450) or replace (up to $850) their gross-polluting cars.⁽²⁸⁾ We favor a repair subsidy program but oppose "buy-back" or vehicle retirement programs.

Any kind of subsidy program invites individuals to position themselves to be recipients. In a sense, a repair subsidy creates a demand for high-emitting vehicles, and individuals will meet this demand if the program does not include countervailing incentives. The following requirements ought to be built into the repair subsidy program:

1. Only repairs certified as necessary to rectifying the car's high emissions are eligible. A car marginally exceeding its emissions standards is not eligible; instead it should be granted a waiver.
2. The car's emission system must show no signs of deliberate tampering.
3. The car must be registered.
4. The car owner must have a low income and low wealth, as evidenced by tax returns.
5. The car owner must pay a deductable, say of $75, of the total repair bill.
6. The car owner must make a copayment for the remaining amount of the bill, say 35 percent. For a total repair bill of $450, therefore, the car owner would pay:
   

$75 deductable + 35 % of $375 = $206
The state would pay $244.

7. No car nor individual could be the recipient of more than one repair subsidy within a four year period.

Funding for repair subsidies could come from general levies on car registration, program fees and fines, or corporate contributions to obtain pollution credits.

We are unenthusiastic about buy-back programs because they are expensive (perhaps $500-$800 per car), and because they tend to remove cars that are in fact driven very little. With a buy-back program, an individual who is about to junk a car would have a strong incentive to put it into a condition that made it eligible for a buy-back program. The buy-back then is not really removing a dirty car from the road. With careful attention the problems with buy-back programs can be reduced, but we should be reluctant to create an additional government program when remote sensing might be able to treat the problem more directly. The remote sensing program would impel owners of high-polluting clunkers to clean them or retire them. Supplemental buy-back programs could perhaps be initiated by volunteer citizen efforts, like Project Clean Air in Kern County, California.

Waiver limits are the thresholds at which the repair bill would be so high that the car is granted an immunity from the program. With a repair subsidy program in place, waiver limits for gross polluters ought to be very high, or perhaps eliminated altogether. It is very rare that an untampered car calls for more than $800 in repairs to rectify its emissions. With the repair program described here, the individual would pay $329 towards the bill. We recognize that even this amount is a very hefty tab for someone in poverty, but this is the rare, worst case scenario.

VI. The Recommended System of Penalty: Monetary Fines

When a motorist receives a citation for exceeding the speed limit, driving recklessly, or parking illegally, he is required to pay a fine. A similar system of penalties could be utilized for smog violations. The alternative to a system of monetary fines would be a system that requires cited motorists to report for follow-up inspection. Here we argue that the best system would utilize monetary fines, and no follow-up inspection.

Let's consider the philosophy behind social control mechanisms in general. There are three goals that such mechanisms may aim at: (1) compensation to those who suffered by the misconduct of wrong-doers; (2) protection of life or property (whether public or private) by deterrence, which is achieved by punishment of wrong-doers; and (3) correction (or rehabilitation) of the ways of wrong-doers.

Now consider the case of remote-sensing. The concrete objective of the program is the protection of the airshed from gross polluters. The airshed is a common property of the citizens, and the government acts on their behalf. Those who respect that property certainly ought not to be penalized for their good behavior (as they are by any variety of periodic inspection). But more to the point, it would be just to have those who damage the common property compensate those who have been harmed. Revenues from fines would go toward financing the program, which benefits the community as a whole. Making gross polluters pay fines is one way of achieving community compensation, and of giving the gross polluters a means of redeeming themselves with the community.

From the point of view of deterence, monetary fines are again at least as good as follow-up inspection. Like speeding tickets, fines for smog violations can be graduated with the extent and consistency of the violation. They can give a mere slap on the wrist to those edging over the (actually enforced) limit, and a stiffer smack to flagrant offenders. A program of monetary penalties will induce motorists to value, and, if necessary, to seek in the marketplace, their own prevention of such deterrence. In other words, motorists will be induced to keep their cars clean.

Finally, there is the issue of corrections or rehabilitation. If the private individual, in his "local situation," values good advice on getting his car to pass muster with remote sensors, he will turn to the same sources that he turns to for his other needs, comforts and pleasures -- namely, his friends, family, neighbors, co-workers and entrepreneurs in the private marketplace. The remote-sensing program will be creating a market demand for prevention-of-smog-citations. This good would under such a program be a normal private good like hamburgers or handkerchiefs; the free, private market will be best at producing and supplying it. Perhaps consumers would demand and mechanics would offer a warranty on smog repairs. Perhaps entrepreneurs would open up drive-through testing facilities that use remote sensing and that charge just a few dollars. Such testing might become be quicker and cheaper than going for a carwash.

Were the government to require follow-up inspection for dirty cars, it would be implementing precisely the command-and-control specification of inputs that we have criticized. The points raised earlier about the problems with specifying inputs -- lack of local knowledge, chance of specifying the wrong inputs, lack of adaptation and experimentation, added administrative costs, and heightened politicization of the issue -- all apply with force to the utilization of follow-up inspection. This is an instance where it is appropriate to invoke the basic truth that capitalism works better than socialism.

Are Monetary Penalties Inequitable?

The first question about equity is whether singling out the gross-polluting minority is unfair. As compared to a system of universal Smog Check, the answer must be that it is not unfair. Universal Smog Check may superficially seem more equitable because everyone goes through a similar experience, but that is the sort of equality that a government achieves when it makes poverty universal. The goal of a good program must be to pursue the problem cases; it is no comfort to them to know that the others also have to undergo Smog Checks or other costly measures. Increasing equality does not necessarily serve true equity goals.

Most high emitters are lower-income motorists. The repair subsidy program will do much to ease compliance for these motorists.

Another equity question is whether a system of monetary fines, as opposed to follow-up inspection, is inequitable. Some might dub monetary fines a payment for the right to pollute. We see no grounds for a charge of inequity. In a sense, in paying smog fines one does buy a right to pollute. In this idiom, however, we would also have to say that in paying speeding tickets one buys the right to speed. And indeed, the rich are in a position to buy more of such rights. But if the rich decide to buy more polluting rights, that means that they have less wealth left over to lay claim to larger portions of the pie in other areas of life, such as food, housing, or entertainment. Once we take a full account of things, we see that imposing monetary fines does not favor the rich.

Consider the case of the rich playboy who tampers with his Porsche and figures that he'll routinely pay the smog fines. The remedy would be, as is done with speeding violations, to escalate the monetary penalties for routine and flagrant offenses. The fines could be gradually heightened until the wayward Porsche driver can expect to pay an extra few dollars for every trip he makes.

A concern about the rich buying the right to pollute seems to us, therefore, unalarming. The important point is that they in fact be made to pay if they are going to pollute. Denying the opportunity to pay cash, and instead requiring follow-up inspection, may indeed make life harder for rich gross polluters, but, short of reveling in malice or envy, no one else will gain comfort from this requirement.

Another way to approach equity concerns is to ask specifically how the poor will fare. Indeed, monetary fines on the poor will smart, and will induce them to clean up their cars. The system of warnings and gradually-increasing fines will, however, give them ample opportunity to avoid the harsher fines. Monetary fines will hurt, but deterrence is a goal of the program. Whether we impose fines or require follow-up inspection, the deterrent power comes from punishing wrong-doers, poor and rich alike.

One appealing idea is to give smog violators the option of paying a fine or reporting for follow-up inspection. This will give the motorists an alternative to paying fines that strain their budgets. We will return to this idea later in the paper.

One final point about equity: Equity is about the difference of conditions between groups, but not only income groups. There is also the distinction between those who comply and those who do not, between the innocent and the guilty. Here equity and justice considerations would seem to dictate that these groups be treated differently. Equity and justice would seem to suggest, rather, that the guilty compensate the innocent for their offenses, at least in an aggregate sense. The best way to do that is by monetary fines.

VII. Estimates of Public-Sector Program Costs and Program Revenues

We have laid out the ideal program: pervasive remote sensing, imposition of monetary penalties, no follow-up inspection, and on-road pull-over units. Here we estimate the public-sector costs and revenues for a program for the greater Los Angeles area. The fleet consists of 8.5 million vehicles.⁽²⁹⁾ We will assume that the average number of times that a car's emissions is read by remote sensors per year is four. In other words, throughout this exercise we are assuming that each year the program makes 4 X 8.5 M (= 34 M) valid readings per year.

To establish the fullest possible range of estimates, every variable will be given three possible values: an optimistic value, and intermediate value, and a pessimistic value. The pessimistic case is really very pessimistic. Nevertheless, even after slanting cost assumptions against the program in every detail, we still find that the program is inexpensive relative to Smog Check. In our judgement, a realistic estimate lies somewhere between the optimistic and the intermediate estimates.

The variables, assigned values, and calculations are shown in Table 1. The table is divided into six parts: Inspection Capability and Remote Sensing Deployment, Costs of Equipment, Labor Costs, Miscellany and Administrative Overhead, Costs of Citations, and On-Road Pull-Over Activities.