Thanks again to all who have responded!
Here is what the inspector stated today. The reason he failed the inspection was due to 680-25.(c) which pertain to motors. In a nutshell it states that the equipment grounding conductor shall be insulated and installed with the circuit conductors in ...rigid nonmetallic conduit etc...).
In reading this section it does seem that PVC is required. I also verified this in the Stallcup's Electrical Design Book which stated the grounding conductor must be installed and run with the circuit conductors in rigid metal conduit, intermediate metal conduit, or rigid nonmetallic conduit from the panelboard to the deck.
Looks like a costly lesson for me.
