In cases of applications for permits to impound and utilize waters of any stream of flood waters under conditions which would cause or permit a considerable return flow of such waters into their natural channel above the diversion or storage works of other appropriators or of others using or who have acquired the right to use water from said stream or stream system, the state engineer is authorized to approve such applications whenever such storage or use of water by the upper owner or owners would not result in depriving such lower users or appropriators of water to the extent of their reasonable requirements.