That's just referring to a title or ID that has, in part, the engine ID number, and what to do if you change engines, so that your title will be correct. That has nothing to do with the laws regarding engine swaps.
The vehicle code is one of many places to look. Try and find the California Code of Regulations, specifically section 3362.1. It prohibits any engine change that degrades the effectiveness of a vehicles emission control system.
The Health and Safety code, starting with section 43000 lays out restrictions as well.
In the vehicle code, section 27156 (c) says No person shall install,..., any device...which modifies...the original vehicle pollution control system.
I have paperwork that the california Air Resource Board sent me when I first opened my business, and it says, in short, "Entire engines can be replaced. As with any other replacement part, the engine must be identical to the original"
Take care,
-Chris
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