yup -- definitely a state-specific thing.
Here in Georgia, they should put an extra sticker on the car that says: "Warning: This car will probably FAIL the emissions inspection, because Georgia's equipment is too STUPID to know that the car is a PZEV"
I'm sure you've heard the stories about Priuses (hmm, is is Priuses or Priii?) failing emissions here because they actually SHUT DOWN the emissions testing machine, which makes them automatically fail the test. So be glad you live in a state that GETS IT.