HOUSTON—Smog earned Houston an "F" grade on air quality from the American Lung Association last year. It has kept the city from meeting federal standards for years.  Now, as the city braces for new federal air-quality rules, Houston is asking who is to blame for the haze here: its millions of cars or 100-plus chemical plants and refineries.  The question isn't just academic. Failure to comply with new rules, proposed this month by the Environmental Protection Agency, could eventually lead to the loss of millions of dollars in federal highway funds.  More than 100 oil-processing companies line the Houston Ship Channel, with the city's skyline in the background.  Refiners and chemical producers, which have scaled back the amount of contaminants they put out in recent years, argue that cars are mostly to blame for smog. But environmentalists and city officials contend that there is still much room for cuts in smokestack emissions.  Regulators keep inventories of how much air pollution there is in Houston, but studies suggest the methods they are using are undercounting emissions, raising questions about how much contamination there is and how much comes from each source.  "We need to at least get a good count. If you have bad data, it's a problem in terms of developing good policies," said Alex Cuclis, a research scientist who has studied how emissions are measured. Mr. Cuclis works for the Houston Advanced Research Center, a nonprofit, nonpartisan group that does research on methods to account for and curb air and water pollution.  If the new standards for ground-level ozone are adopted, they will force states to considerably reduce air pollution. State regulators are responsible for developing plans to fulfill federal rules, but the EPA must approve them and has the authority to step in if a state can't come up with an acceptable solution.  Ground-level ozone, the main component in smog, is created by a cocktail of pollutants spewed by sources including cars, trucks, planes and heavy-industry facilities, such as refineries and power plants. The EPA regulates ozone levels because breathing the gas can cause respiratory problems.  Both cars and industry emit two main culprits for smog: nitrogen oxides and volatile organic compounds. Once they all come together, though, it is hard to trace them back to their origin, said Mr. Cuclis.  Houston, where hazy days are common, has a more complicated accounting job than most cities. But air-quality researchers and regulators say other places around the country face the same challenge of accurately measuring emissions and meeting more stringent standards.  Houston, for many years a violator of federal ozone standards, last year barely made the 1997 standard of 0.084 parts per million. However, the current standard is 0.075 parts per million and will likely be lowered to between 0.06 and 0.07 parts per million under the EPA's proposal.  Houston's newly elect mayor, Annise Parker, says that the city plans to weigh in on the proposed standards, encouraging federal regulators to make them as flexible as possible, but adds that she would like the government to strictly enforce those rules once they are passed.  "I hope that the administration is aggressive in pushing all cities to improve their air quality, even if that means that Houston could suffer penalties," she said.  City officials, environmentalists and federal regulators agree that cars and trucks are a major source of smog, but they say vehicle emissions have dropped in recent years because of technology improvements and cleaner fuels, despite the growing number of cars. Harris County, where Houston is located, had 3.1 million cars last year compared with 2.9 million in 2005.  "I don't want to imply we have solved the motor-vehicle problem, but we have very good programs that have been successful already," said Al Armendariz, who leads the EPA office that oversees Texas.  Emissions from the nine refineries and more than 100 chemical plants in the Houston area are falling too, but aren't expected to do so as fast. In 2006, on-road vehicles accounted for 35% of certain ozone-creating pollutants, while industry made up 31%, according to data from the Texas Commission on Environmental Quality, the state's environmental agency. By 2018, the agency predicts, factories and other industrial facilities will produce 43% of those pollutants, and cars and trucks 14%. Still, determining emissions from hulking manufacturing facilities is tough. While the standard counting methods rely on measurements, they only produce estimates.  Data from two major studies conducted by state and federal government agencies, as well as universities and research groups, indicate that the methods currently used are undercounting emissions in the Houston area. In the case of one pollutant, levels were more than 10 times what estimates suggested, one of the studies found. Texas environmental regulators say they are working to improve the way emissions are counted.  However, they say that in places like Houston, where industry has substantially ratcheted back certain types of pollutants, there are no easy cuts left.Refiners say the EPA's proposed standards can't be reached without shutting down considerable amounts of manufacturing and refining activity. "Houston cannot get there," said Charles Drevna, president of the National Petrochemical and Refiners Association.  Bryan Shaw, chairman of the state environmental agency, said that to meet the proposed standards, the state would have to resort to measures such as banning drive-through windows to prevent cars from idling, and limiting lawn mowing to certain periods of the day.  Environmentalists, health advocates and EPA officials suggest stricter compliance and the use of existing sophisticated monitoring technology to track down emissions to their source.  Write to Ana Campoy at ana.campoy@dowjones.com
A debate over what is more to blame for Houston's smog problem—cars or chemical plants and refineries—is taking on added importance as it braces for tougher federal air-pollution rules.