Well, those are some idiot water purveyors. A lot of times, they make exceptions. If you have a smart controller, you don't have to worry about the restrictions.
Anyway, you could get around this a little and still do the smart control method AND sort of be within the guidelines, if you wanted. When you are programming each zone (smart control method, not timer) you can customize the maximum cycle and soak times. So if the restriction was 20 minutes. Then I would just adjust the maximum cycle to 20 minutes and adjust the minumum soak to 120 minutes. That way if the smart controller felt it needed to water for 40 minutes, it would come on once at 6:00 a.m. or whatever, go for 20 minutes, then let that soak in for 2 hours and then turn in again for another 20 minutes. Then you still get your 40 minutes (or whatever the smart controller thinks is necessary that day based on the E.T. that has been happening) but you're only doing 20 minutes at a time.
Yah, this is cheating a little. But are the police going to sit there for 2 hours and say, "Hey! Wait a minute! That zone already came on for 20 minutes earlier!" I seriously doubt it.
That's how I'd get around it. But yah, you can turn it into just a timer if you want....