Given that I'm in the UK perhaps I shouldn't answer this question – but no one else seems to be - so here goes:
I think the regulation your refering to is FAR101 - “FAA Regulations for Kites/Balloons” and the section you have read is 101.35 “Equipment and marking requirements.” which says:
(a) No person may operate an unmanned free balloon unless-
1. It is equipped with at least two payload cut-down systems or devices that operate independently of each other;
2. At least two methods, systems, devices, or combinations thereof, that function independently of each other, are employed for terminating the flight of the balloon envelope; and
3. The balloon envelope is equipped with a radar reflective device(s) or material that will present an echo to surface radar operating in the 200 MHz to 2700 MHz frequency range.
However balloons with payloads below a set of conditions laid out in the first section of FAR 101 are not subject to these rules:
(a) This part prescribes rules governing the operation in the United States, of the following:
(4). Except as provided for in 101.7, any unmanned free balloon that-
(i) Carries a payload package that weighs more than four pounds and has a weight/size ratio of more than three ounces per square inch on any surface of the package, determined by dividing the total weight in ounces of the payload package by the area in square inches of its smallest surface;
(ii) Carries a payload package that weighs more than six pounds;
(iii) Carries a payload, of two or more packages, that weighs more than 12 pounds; or
(iv) Uses a rope or other device for suspension of the payload that requires an impact force of more than 50 pounds to separate the suspended payload from the balloon.
With 101.7 being:
101.7 Hazardous operations.
(a) No person may operate any moored balloon, kite, unmanned rocket, or unmanned free balloon in a manner that creates a hazard to other persons, or their property.
(b) No person operating any moored balloon, kite, unmanned rocket, or unmanned free balloon may allow an object to be dropped therefrom, if such action creates a hazard to other persons or their property.
So the way I read it as long as you don't do anything stupid (as in 101.7) and as long as the payloads being carried:
- are in total less than 12lb
- with no single package more than 6lb
- with no package above 4lb that has a weight/size ratio of more than three ounces per square inch on the smallest side
- use a rope/line (or release device) that breaks at less than 50lb “impact force” up to balloon.
Then you are exempt form the rest of FAR101 and therfore don't need:
* two methods of flight termination.
* to carry a radar refector.
However break any of the above and you do.
Just the way I read it - perhaps a US member could confirm my understanding.