The water heater can not be located in any bedroom, bathroom or clothes closet. 
The water heater must be accessible for maintenance and relighting of the pilot.
All gas or propane burning appliances need a plentiful supply of air to operate efficiently and safely.
When a gas hot water heater is starved of air/oxygen it burns inefficiently and creates carbon monoxide, a deadly, life threatening gas.
At the time the gas water heater was installed, the installer and the local building inspector made sure that the unit had an adequate supply of air to operate safely.
It may be that the room where the gas burning heater is located is currently very large. If a remodeling project reduces the size of that room by putting up walls, the available oxygen/air supply will be reduced substantially, possibly creating a potentially life-threatening situation.
If the water heater is located in a small closet type room, it must have its air supplied through vent pipes from the attic, through louvered doors to the room or a large air vent in the wall.
NOTE: Vent or breather pipes to the attic must extend above the insulation. One pipe should terminate 12 inches below the ceiling, and the second pipe 12 inches from the floor.
Regulation for hot water heater combustion air:
- Unconfined space – minimum 50 cubic feet of space per 1000 btu per hour.
- Confined space – two openings 100 square inches each, freely communicating with unconfined space.
NOTE: this is just for the hot water heater if a furnace is in the same room, more air will be necessary.
