All parts of Oleander are poisonous if ingested.  Don't  burn prunings as smoke can cause severe irritation.
That said, Oleanders are EVERYWHERE in Northern California.  I have probably 20 to 40 plants in my own yard!!  I have a well and extensive irrigation lines on my 2 acres and raised 3 kids here.  My grandmother had oleanders all around her 20 acres --4 kids and 15 grand kids.  I have NEVER heard anything about oleanders and water lines!!
I checked in the Sunset Western Garden Book (which is the Bible for gardeners in the west) .  It notes that the Oleander is the basic landscaping shrub in the west.  While it gives the basic warnings about the parts being poisonous (what I included in the first paragraph), it does not give any indication that being near a water line is any problem.
Frankly, I don't know of ANY poisonous plants that contaminate water lines. Think about it --poison oak/ivy/sumac grows along the banks of creeks and streams and people drink that water with no effect!!
If you have a sunny area and need a shrub that requires little to no summer watering, my first thought would be:  OLEANDER!!
Good Luck!!
I have heard that you should never plant oleander near a water line. Is this a fact and if so why not?
Oleander is beautiful but very very poisonous. Planting near a water line might cause contamination even though it is really highly unlikely because your water line should be leak proof. Have a nice week.
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