Background

1. In the 1940s, Casmite (a Nevada corporation organized in 1936) commenced oil field operations in Santa Barbara County along U.S. Highway 1, half-way between San Luis Obispo and Santa Barbara. As part of these operations, Casmite constructed a water system and began pumping from an underlying aquifer, which remains the source of water today. As an accommodation, Casmite began to provide nearby residents with water from the system.

2. In 1953, The Union Oil Company of California (Unocal) acquired all of Casmite's stock.

3. In 1994, Unocal sold off the oil field operations but retained the water system.

4. Casmite provides water to seven customers, and no new customers have been added to the system since the 1960s. Six of the customers are metered; one is not.

5. One of the metered customers is the Casmalia Community Services District, a public entity created under California law. Casmalia takes delivery of water from Casmite at a meter and, in turn, delivers the water to 52 residential and two commercial properties through its own distribution system. Each of the Casmalia properties is metered and billed by the Community Services District for water usage.

6. The unmetered customer receives water from Casmite in exchange for an unrecorded easement.