Yes, it is an overpressure valve designed to protect the heater core. These were installed during a recall around 1993-4, I recall. They suck to install when the engine is in the car. I recall that only the E30 M42 got these. I never had to do one, as we only had a few M42 cars out there......Come to think of it, I'm not sure mine has one. I can't comment on whether you really need this, or not.