California Code, Health and Safety Code - HSC § 4767

Any county sanitation district may, in addition to its other powers, acquire, construct, control, operate, and maintain waterworks, conduits, reservoirs, storage sites, and other works and facilities for the production, treatment, storage and distribution of a water supply for domestic and other uses.  The district may also purchase water from any other utility district, public agency, person, or private company, and distribute it.

The district may only distribute and sell to retail customers domestic water supplies outside the district by means of facilities designed primarily to serve inside the district.  Before a district may so distribute and sell to retail customers domestic water supplies within the boundaries of another district or municipality which has the same or similar powers with respect to domestic water supplies, it shall secure the consent of the governing body of such other district or municipality to do so.