You are correct, this needs to be corrected. Here's why, and how to proceed

Why it's wrong and dangerous:
Improper Grounding/Bonding at Subpanel

This is a classic case of improper grounding at a subpanel. With the neutral bonded to the enclosure (ground) at the subpanel, you're creating a parallel path for neutral current. This means neutral current is flowing not only on the neutral conductor back to the main panel, but also on the grounding conductor and potentially the metal conduit system.

Stray Currents & Potential Hazards

This can lead to:

Nuisance tripping of breakers

Because the current is sharing paths.

Electromagnetic interference (EMI)

Can disrupt sensitive electronic equipment.

Voltage on metal enclosures

A shock hazard, though likely low-level, it's still a risk.

Fire hazard

If the grounding path becomes high-resistance (due to corrosion, loose connections, etc.), the grounding conductor can overheat.

Code Violation

Current electrical codes, and likely even those in effect in the late 70s, require that the neutral and ground be separated at subpanels. The only point where the neutral and ground should be bonded is at the service entrance (the main panel).

What Needs to Be Done


Separate Neutrals and Grounds



Remove the Neutral Bonding Screw

Locate the bonding screw or strap that connects the neutral bus bar to the subpanel enclosure. Remove it. This isolates the neutral bus.

Add a Separate Ground Bus

If the subpanel doesn't have a dedicated ground bus, you will need to install one. You can buy aftermarket ground bus bars designed for Square D QO panels. Ensure the ground bus is securely bonded to the metal enclosure.2.

Run a Fourth Wire (Equipment Grounding Conductor)



This is the key! You must run a dedicated equipment grounding conductor (green insulated wire or bare copper) from the 400 amp main panel to the subpanel. This conductor should be sized appropriately for the overcurrent protection device (200 amp breaker) feeding the subpanel. See NEC Table 250.122 for grounding conductor sizing. Proper Termination

Connect the grounding conductor to the grounding bus in both the main panel and the subpanel.3.

Important Considerations



Conduit as Ground? If the wiring is in metal conduit (rigid, IMC, or EMT), the conduit itself can act as the grounding conductor IF it's properly installed with tight connections and listed fittings. However, it's best practice to also run a dedicated grounding conductor, regardless of the conduit. This provides a redundant grounding path and is now required for any conduit with supplemental grounding required. Aluminum Conductors

If the conductors are aluminum, proper termination and anti-oxidant compound are critical. This applies to both the power conductors and the grounding conductor (if aluminum).

Wire Sizing

Verify that all conductors (hot, neutral, and ground) are appropriately sized for the 200A breakers feeding the subpanel.

NEC Compliance

Make sure the entire installation complies with the current National Electrical Code (NEC) and any applicable local codes.

Safety First



De-energize Before Working

Turn off the breaker feeding the subpanel and the main breaker at the 400A panel before doing any work. Verify with a voltage tester that the circuits are dead.

Qualified Electrician

This work should be performed by a qualified and licensed electrician. Improper wiring can create serious safety hazards.

In summary, the 3-wire configuration with bonded neutral at the subpanel is incorrect and unsafe. You must separate the neutral and ground at the subpanel, install a separate ground bus, and run a dedicated equipment grounding conductor from the main panel to the subpanel.

While codes in the 70s may have been less strict, grounding and bonding principles haven't changed that drastically. This setup was likely never* the correct way to install a subpanel. Don't risk it – get it fixed by a professional electrician. Flag for review