Growing environmental concerns regarding the use of heavy metals in coating formulations have lead to a new coating strategy employing inherently conducting polymers (ICPs), such as polyaniline (PANI). as a key component. The principal potential advantage offered by the ICP coating technology is toleration of pinholes and minor scratches. This paper describes the application of the scanning reference electrode technique (SRET) to the study of PANI coatings on carbon steel. SRET results demonstrate that conductive PaNI "passivates" pinhole defects in coatings on carbon steel. In addition, it is shown that phosphonic acid salts: of PANI are more effective for corrosion protection than sulfonic acid salts. A model is proposed which entails passivation of the metal surface through anodization of the metal by PANI and formation of an insoluble iron-dopant salt at the metal surface.