you would have to check your local codes. Here in missouri they are not required but I would suggest it to avoid a mess if the heater ever starts leaking or the t and p blows. As far as drilling the slab the key word there is supposedly.I want to re-locate my water heater into a utility closet and finish the basement. I want to move it 25 feet and put it next to a concrete wall. Does code require a nearby floor drain? Can I put a pan under the water heater and drill a 1" hole thru the basement floor to drain the water from a water heater problem into the 8" of gravel that is suposed to be under the slab?