Re: Grounding on Grounded Lug
You should always adhere to the NEC, whether you think you know the reasoning behind a section or not, for starters. It's been said that "every section, when traced back through a series of events, was brought on by a hazard."
That said, here's one aspect of what happens. You've got a couple violations coming down the pike. When the water pipe comes to the detached building, it will be coming from the same building supplying the electrical to the detached building.
You will want to connect your panel to it.
When you do this, here's what happens: Imagine that light, turned on. He's running a saw, that's on too. He's got the tunes on, overall, he's pulling, say, 16 amps on a phase. There are 16 amps that are supposed to be on the neutral.
When the neutral current reaches the panel, then it goes two ways: you have a parallel path set up.
The resistances determine how many amps flow on each, let's say they're equal. 8 amps are flowing on the water pipe, and 8 on the real neutral.
I've got to get to work, but here's your solution:
Use the white conductor for a neutral. Use the bare conductor for a grounding conductor. Abandon a phase. Chances are, he wouldn't miss it anyway. And it's much, much safer.
Or, when he digs in the water pipe this spring, put in the proper conductors at the same time.