California Code, Public Utilities Code - PUC § 99281

The transit district may operate or establish new routes or extend existing routes in all or part of the area outside a municipal operator, except where the operation or establishment of that service will compete with or divert patronage from an existing service of any included municipal operator or service in a reserved service area under Section 99280. However, this limitation upon the district does not apply with respect to services established outside a reserved service area by an included municipal operator under Section 99280.

Unless both the department and the statutorily created regional transportation planning agency designate otherwise, the transit district has the sole prerogative of using funds available under this chapter for the purpose of constructing and operating a grade-separated mass transit system, regardless of whether the operation of the system competes with or diverts patronage from any services of an included municipal operator.