California drought: Wealthy Hillsborough residents sue, saying water rates are too high

In a case that could have statewide ramifications, a group of multimillionaire Hillsborough residents, including an early funder of Microsoft, has sued the town claiming that its drought rules and penalties intended to keep people from over-watering big lawns are illegal.

The nine residents who are taking the town to court say that by imposing tiered water rates, and a $30 penalty for each unit of water used over the allotted amount, Hillsborough water officials violated Proposition 218, a state law that makes it illegal for government to charge more for a service than it costs to provide.