Let's aproach this from another view.
THe local AHJ stated "non compliance".
Did he state a NEC Article??
We have to in NJ to make it a valid "Fail".
Now that I said that...
THe AHJ usually has the final word, unless you have an appeal process. If you do, then you have to "win" the Appeal. This usually takes time...(Time + Money)
You also probably will have future dealings with this AHJ, or other ones that he knows.
(Some AHJ's have good memories)
I'm not saying that AHJ's are vindictive if they "loose", but who knows.
The solution, in my humble opinion is to change the feeder. This way you can't really loose.