Wat. Code, § 1245

Every municipal corporation of this State, and every person, firm or corporation engaged in supplying water to any municipal corporations for municipal, domestic or other uses, who enters any watershed, or any lands, streams or waters in the watershed for the purpose of acquiring or increasing a water supply for such purpose, or for the purpose of taking, diverting or transporting water for use by or in a municipal corporation, or for the purpose of supplying the needs of any municipal corporation, or its inhabitants, with water for the enumerated uses, shall be liable to all persons, firms and corporations, their heirs, representatives and successors, and to municipal corporations, districts and political subdivisions of this State whose property, business, trade, profession or occupation is within or conducted or carried on within the watershed entered, for all damage suffered or sustained by them either directly or indirectly because of injury, damage, destruction or decrease in value of any such property, business, trade, profession or occupation resulting from or caused by the taking of any such lands or waters, or by the taking, diverting or transporting of water from such watershed to and for use by or in any such municipal corporation.