The question is, 'does the EI have the authority force a repair?
I'm fairly certain that it is in the IBC (adopted here in MA) that the building Owner is responsible to "maintain" the building(s). Does that give the electrical inspector any authority? Probably not. I suspect only the code official could issue such an order, but not the 'inspector of wires" we have here in MA.

But again, i do not think the fabric serves any purpose anymore, so repairing/covering it seems pointless. Digging, laying new conduit and pulling new conductors then seems pointless x 1,000.

I have an e-mail and pix into Okonite to see if they agree about the function of the cloth.