On August 1, 2005, at 1909 central daylight time, a National Ballooning 751-12, N3219T, sustained substantial damage during a forced landing when it impacted power lines near Indianola, Iowa, after an in-flight fire. The private pilot and passenger were not injured. The Title 14 Code of Federal Regulations Part 91 personal balloon flight departed a field near Indianola at 1902 as part of the National Balloon Classic race event. Visual meteorological conditions prevailed. No flight plan was filed. The pilot reported that during the preflight checks of the balloon, he had connected the two liquid propane lines and the pilot light vapor line with the appropriate wrenches. He reported that he did a "sniff" test of each of the tanks and burner connections. He did the same for the pilot light line. He reported that he did not smell any propane leaking from any of the connections. He lit the pilot light and tested each of the three propane tanks for proper operation. He reported that, "all tanks were functioning at approximately 150 psi." The pilot reported the balloon lifted off the field and that the burner was functioning normally. He reported that the balloon was about 700 feet above ground level (agl) when he observed flames "coming from both the pilot light hose and the tank hose (right side of aircraft and the side where two tanks are manifolded together)." He attempted to put out the fire with his gloved hand, but was unsuccessful. He then shut off the tanks at the tank valves on the right side of the balloon, but the fire continued. He reported that an emergency landing was imminent so he shut off the third tank on the left side of the balloon. Then he rechecked to make sure the manifold valves were shut off. The pilot reported that the bottom of the balloon's basket hit the power lines. The balloon continued to descend until the basket impacted the ground. The basket tipped over when it hit the ground, and the pilot and passenger exited the basket. The pilot used the on-board fire extinguisher to put out the fire that was still burning at the hose-burner connection. The pilot reported that once the balloon was removed from the power lines, he retrieved the envelope and basket. He disconnected the fuel lines and the pilot light line while the ground crew put the envelope away. Federal Aviation Administration (FAA) inspectors examined the balloon at the accident site. The inspector reported that the burner and basket were reassembled. The inspector monitored the pilot's preflight checks and observed the pilot connecting the fuel lines and the pilot light line. No propane leaks were noted during the burner operational checks. The burner functioned normally. The FAA inspector reported that, "Pictures of the propane bottle provided by the fire department appeared to show frost on the pilot light valve." The inspection of maintenance records revealed no anomalies.