It’s not really clear from the original post what the report says. Water supply pipes are supposed to be routed below the depth to which the ground can freeze in the winter and are also supposed to be otherwise protected on the run into the house. Not quite sure how the supply line could freeze solid…
The only other option I can see is that the inspector installed a freeze plug intentionally to seal the system off from the main line out to the street. I’ve used freeze plugs before but never heard of anyone doing that in a residential application.