A California appeals court has ruled that San Juan Capistrano's tiered water-rates are unconstitutional.

The 4th District Court of Appeal ruling Monday could have broader implications for other cities that use a similar pricing structure to encourage conservation.

The ruling upholds an Orange County judge's decision that found that charging the biggest water users higher rates violates a voter-passed law that prohibits government agencies from charging more than the cost of a service.

San Juan Capistrano charged nearly four times as much per unit of water for the highest users, to encourage conservation.

Residents complained the higher rates were arbitrary and unfair.

Gov. Jerry Brown recently issued drought orders that called on local water agencies to implement tiered water pricing to help save water.