The California Energy Commission is developing a proposal that could require companies selling HVACR and water heating equipment — including manufacturers, distributors, and contractors — to report transaction-level details about what equipment is sold, who it is sold to, and where it is installed, in a state-managed database designed to improve HVAC installation permit compliance. HARDI has raised sharp objections, warning that the proposed data collection scheme would create a government-managed database of every HVAC business's customer lists that, if leaked or accessed by competitors, could force a business to close.
The concept was floated publicly at the AHR Expo earlier this year, when Scott Blunk of the California Energy Commission described the proposal during an educational session and drew a strong reaction from distributor and contractor attendees. Blunk acknowledged the context for the proposal: HVACR permit compliance in California has been below 10% for more than 20 years, meaning the overwhelming majority of HVAC equipment installations in the state are completed without the permits required by local building codes. The CEC sees equipment tracking — comparing purchase records against permit records — as a practical mechanism for identifying installations that were done without documentation, with the stated goal of protecting consumers and leveling the competitive playing field for contractors who pull permits as required.
What the Reporting Would Require
According to HARDI's analysis, the proposed reporting requirement would go beyond simple serial number tracking to require distributors to log the make and brand, model number, customer name, customer billing address, and the business ID or contractor California State License Board license number when applicable, for every transaction in and out of the warehouse. That means California would create a database containing every HVAC distributor's complete customer list — including contractor customers, their purchasing histories, and the identities of the end-use customers to whom those contractors sold equipment.
HARDI's objection is framed primarily as a competitive and data security concern. The association argues that a supposedly secure state database holding the competitive intelligence of every HVAC distributor operating in California creates the risk that, if the database is breached or improperly accessed, it could expose a distributor's entire contractor customer base to competitors — information that took decades to build and that, if lost to a competitor, could effectively destroy the distributor's market position. The broader framing of the concern is that the state would be compelling private businesses to create and hand over their most sensitive commercial data under the justification of permit compliance enforcement.
Industry Opposition
AHRI submitted comments to the CEC stating that manufacturer-level or serial-number reporting requirements would impose significant administrative and operational burdens while failing to produce reliable or meaningful data. The association argued that such a system would require new databases and staffing investments while doing little to actually improve permit compliance or accurately track installed equipment — since the connection between a unit sale to a distributor and a specific residential or commercial installation address involves several intermediate steps, each of which introduces potential data gaps that undermine the compliance intelligence the CEC is trying to generate.
The proposal stems from SB 795, a 2023 California bill that would have required the CEC to create a statewide HVACR equipment sales registry and compliance tracking system. That bill died without becoming law, but the underlying concept was preserved in the regulatory pipeline through the CEC's Energy Data Collection Phase 3 rulemaking, Docket 24-OIR-03, where the CEC has issued requests for information and held stakeholder workshops to explore potential reporting frameworks. The proposal has not been finalized and remains in a pre-rulemaking stakeholder engagement phase as of mid-2026. HARDI and AHRI are among the stakeholders who have submitted critical comments, and the CEC has indicated it will consider industry feedback before advancing a formal rulemaking.
The Broader Permit Compliance Problem
The permit compliance problem the CEC is trying to solve is real. A sub-10% permit pull rate on HVAC installations across a state with California's size and environmental regulatory framework represents a significant enforcement gap. Contractors who pull permits must comply with Title 24 energy efficiency requirements, pass inspections, and bear the administrative costs of the permitting process — creating a cost disadvantage relative to unpermitted competitors. The result is an unlevel playing field that, as Blunk noted at AHR Expo, is a source of legitimate frustration among the contractors who are doing things correctly. The debate in California is not whether permit compliance matters but whether a transaction-level equipment registry is the right tool to address it, or whether the compliance and competitive costs of that data collection scheme outweigh its enforcement benefits.
