Background: I was a smog tech in CA for many years. I am not fully versed in AZ laws, but they probably follow CA for the most part.
1. the car could have been built with a 340. This means that provided you install a similar year engine and equip it with all the components required and installed on a 69 340, you should be fine.
2. Unless they are very thorough or know that a 318 didn't come with a 4 bbl that year, they may not even catch that the engine has been changed. They didn't require us to verify casting numbers.
3. I was going to say that you should go to the source for the rules, but I checked and it's a typical gov't nightmare!
Here is the CA info. This is NOT AZ INFO, but explains what you have. BTW, they don't do vehicles older than 1975...
http://www.arb.ca.gov/msprog/aftermkt/replace.htm/Engine Changes
Engine changes are legal as long as the following requirements are met to ensure that the change does not increase pollution from the vehicle:
The engine must be the same year or newer than the vehicle.
The engine must be from the same type of vehicle (passenger car, light-duty truck, heavy-duty truck, etc.) based on gross vehicle weight.
If the vehicle is a California certified vehicle then the engine must also be a California certified engine.
All emissions control equipment must remain on the installed engine.
Vehicles converted to 100% electric drive, with all power supplied by on-board batteries are considered in compliance with the engine change requirements. All fuel system components must be removed prior to inspection. For additional information contact the ARB helpline at (800) 242-4450
After an engine change, vehicles must first be inspected by a state referee station. The vehicle will be inspected to ensure that all the equipment required is in place, and vehicle will be emissions tested subject to the specifications of the installed engine.
