Except where the co-operation required by the United States in addition to the costs of all lands, easements, and rights-of-way, has been authorized to be assumed by the State prior to March 12, 1946, the department shall not reallocate the funds allocated to it, nor shall the Reclamation Board expend any funds appropriated directly to it, for acquisition of property rights or contributions to the United States, for any project for which the Reclamation Board is directed to give assurances to the United States unless and until a public agency other than the Reclamation Board has either assumed the obligations of maintenance and holding the United States harmless from damages due to the construction of works, directly with the United States, or has by binding agreement with the Reclamation Board agreed to assume such obligations and to hold the State and the Reclamation Board harmless from any claims therefor.

This section is not intended to prevent the expenditure of project funds by the Reclamation Board for planning and design engineering, title reports and appraisals, and other incidental expenses required in advance of actual acquisition of property rights.