Vlad, the electrical code has absolutely no legal force unless and until some legal entity 'adopts' the code. That legal entity (town, county, state, etc.; usually the town) generally decides who the inspector is and what sort of supervision/review process is to be followed. You need to figure out which government gave that inspector jurisdiction.
Depending upon how sane/professional/reasonable the inspector is, you may simply need to politely tell the inspector that you believe that the judgement was wrong, and ask what the review process is, or you may need to bypass the inspector and go directly to the town government or state review board.
For what it's worth, using underground piping as an electrode can cause problems, including the parallel path issue that wa2ise mentions, or causing electrolysis. If there is some local condition that makes using underground water pipes as electrodes particularly unsafe or problematic, then I could understand prohibiting such use, and the local authority is legally capable of changing the code to suit local conditions.
However using the water pipe as a grounding electrode also has the effect of bonding the interior metal water piping, and leaving the interior water pipes un-bonded is a recipe for getting someone killed. If the inspector provided a means for bonding the interior water piping but not using the service pipe as an electrode, then there is probably some good local reason for that. But doing this would require corresponding requirements in the plumbing code, not just the electrical code. If the inspector is prohibiting _bonding_ the interior metal water piping, then the inspector is nuts.
-Jon
