US  |  Tue Apr 21, 2015 4:32am EDT

A state appeals court ruled on Monday that a southern California city's tiered water rates, developed in an effort to combat overuse during the state's ongoing drought, violated the state's Constitution.
The three-judge panel for the state's 4th District Court of Appeal sided with taxpayers of the Los Angeles-area city of San Juan Capistrano, who filed a lawsuit against the city's plan to charge differing rates based on water usage.
The judges said in the 29-page opinion that the cost schedule was unconstitutional because it made some consumers pay more for water than it cost the government to provide it, violating a voter-approved proposition.
"We do hold that above-cost-of-service pricing for tiers of water service is not allowed by Proposition 218 and in this case, [the city] did not carry its burden of proving its higher tiers reflected its costs of service," they wrote.
The panel sent the case back to a lower court, adding that the rate tiering can be legal if a connection between pricing and costs can be demonstrated.
The ruling comes as a potential blow for municipalities attempting to find solutions for the state's ongoing drought. The Los Angeles Times reported that at least two-thirds of water providers in the state use some type of tiered system, including the Los Angeles Department of Water and Power.
"The practical effect of the court's decision is to put a straitjacket on local government at a time when maximum flexibility is needed," Governor Jerry Brown said in a statement, adding that the state's attorneys were reviewing the ruling.
Brown earlier this month ordered an overall 25 percent cut in urban water use though the first statewide mandatory reductions in California's history, as it enters the fourth year of a devastating drought.
On Saturday, state water regulators revised the still-tentative drought plan by easing cuts for Los Angeles and San Diego and bumping up reduction targets in the areas that consume the most water in an apparent response to criticism from cities.
The plan, developed by the state's Water Resources Control Board, is scheduled to be approved in early May, but officials said more fine-tuning could take place before then.