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The last time I took my car in for a (California) smog check, they definitely stuck a sensor up the tailpipe. Also run the engine for fixed duration at several set speeds to get a variety of readings, on a dynomometer (a treadmill, basically) to simulate actual driving speeds.

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Apparently Californians get a double whammy on cat thefts - a generic replacement cat converter for most states costs about $500, but the exact same replacement cat that is certified by CARB (California Air Resources Board) runs about $2k. This explains why older CA cars are more likely to be totaled out by a cat theft.

I think California is the only state that does this. Most other states do visual inspections or OBD-II tests.

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