The amount of pollution in New York is equivalent to that of New Jersey.
The amount of pollution in New York is equivalent to that of in New Jersey.
The amount of pollution in New York is equivalent to that in New Jersey.

Which one(s) are/is correct?

The amount of pollution in New York is equivalent to that of in New Jersey

--- is correct.

Can the third one be also correct? That can replace a noun phrase i assume...

I thought I knew this part of pronoun reference, but now I am confused.

A quick search for a keyword "that of" in 1000SC led me to believe that there is a bit of science in this section of pronoun reference.

I have copied some of questions below to conclude for yourself.
OA's are in white under each question.

Would be keen to hear some insights.

404.In the 1980’s the rate of increase of the minority population of the United States was nearly twice as fast as the 1970’s.
(A) twice as fast as
(B) twice as fast as it was in
(C) twice what it was in
(D) two times faster than that of
(E) two times greater than

487. Like the color-discriminating apparatus of the human eye, insects’ eyes depend on recording and comparing light intensities in three regions of the electromagnetic spectrum.
(A) insects’ eyes depend on
(B) an insect eye depends on
(C) that of insects depend on the
(D) that of an insect’s eye depends on
(E) that of an insect’s is dependent on the

553. Once they had seen the report from the medical examiner, the investigators did not doubt whether the body recovered from the river was the man who had attempted to escape from the state prison.
(A) did not doubt whether the body recovered from the river was
(B) have no doubt whether the body recovered from the river was
(C) had not doubted that the body recovered from the river was
(D) have no doubt whether the body recovered from the river was that of
(E) had no doubt that the body recovered from the river was that of

569. Our rate of teenage pregnancies is among the highest in the industrialized world, being exceeded only by Chile, Hungary, Romania, Cuba, and Bulgaria.
(A) is among the highest in the industrialized world, being exceeded only by
(B) is among the highest in the industrialized world, exceeded only by that of
(C) are among the highest in the industrialized world, only exceeded by
(D) is among the highest in the industrialized world, and exceeds only
(E) are among the highest in the industrialized world, and they exceed those of only

404 OA C
487 OA D
553 OA E
569 OA B

I'm not sure if its a good written practice to use two preposition as they are used in II.

I would have gone with the III choice.

yea, only #3 works, which is why i bumped this thread back up.