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The code is that the exhaust must be installed according to the manufacturer's instructions. Some 90%+ unit's exhaust can be as close as 12" from a window. Your inspector is even wrong about the 3' it's actually 4' not 3' for many units (usually 80%). The only way I can be specific is if you can give me the model number for your unit. It should be on the rating tag which should be iside the burner compartment.
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