United States Government Accountability Office

Washington, DC 20548 

May 25, 2006 

The Honorable Loretta Sanchez 

Ranking Minority Member 

Subcommittee on Economic Security, 

 Infrastructure Protection, and Cybersecurity 

Committee on Homeland Security 

House of Representatives 

The Honorable Louise M. Slaughter 

The Honorable John M. McHugh 

House of Representatives 

Subject: Observations on Efforts to Implement the Western Hemisphere Travel 

Initiative on the U.S. Border with Canada 

Securing the U.S. border has received increasing attention since the terrorist attacks 

of September 11, 2001. For years, U.S. and Canadian citizens have crossed the 

northern border using documents such as driver’s licenses or birth certificates or in 

some cases without showing any documentation. Border crossings are commonplace; 

in 2005, for example, an estimated 13 million U.S. citizens crossed the northern 

border. In the heightened national security environment after September 11, we have 

previously reported that documents like driver’s licenses and birth certificates can 

easily be obtained, altered, or counterfeited and used by terrorists to travel into and 

out of the country.1

 The Intelligence Reform and Terrorism Prevention Act of 2004 

requires the Secretary of Homeland Security, in consultation with the Secretary of 

State, to develop and implement a plan that requires a passport or other document or 

combination of documents that the Secretary of Homeland Security deems sufficient 

to show identity and citizenship for U.S. citizens and citizens of Bermuda, Canada, 

and Mexico when entering the United States from certain countries in North, Central, 

or South America.2

 The act requires the Department of Homeland Security (DHS) and 

the Department of State (State) to implement this requirement by January 2008, and 

the effort to do so is called the Western Hemisphere Travel Initiative (Travel 

Initiative).

While requiring passports for all border crossings would meet the requirements of the 

law, the possibility that DHS and State would do so has been highly controversial, 

and it centers attention on the difficult task of improving border security while still 

 1

GAO, Counterfeit Documents Used to Enter the United States from Certain Western Hemisphere Countries Not Detected, 

GAO-03-713T (Washington, D.C.: May 13, 2003). 2

Pub. L. No. 108-458, § 7209, 118 Stat. 3638, 3823 (2004).
facilitating commerce and travel. Members of Congress, officials from state and local 

governments, officials from the Canadian government, and representatives of the 

business community have expressed concern about the Travel Initiative, particularly 

as it relates to the cost of purchasing passports for families and the possible impact 

on cross-border tourism at the northern border.3

 For example, it would cost an 

American family of four over $350 to purchase passports to return to the United 

States after making a trip or multiple trips to Canada or elsewhere. Many fear the cost 

of passports will discourage unplanned or spontaneous travel, especially among 

those who cross the border to shop or dine or take a last-minute weekend trip. DHS 

and State have responded to these concerns by proposing a People Access Security 

Service (PASS) card that may cost less than a passport.4

 The proposed card would be 

an alternative form of a passport for U.S. citizens who cross the border by land, and it 

would demonstrate both citizenship and identity. Meanwhile, various other 

alternatives have been proposed or suggested as ways to meet the Travel Initiative. 

One proposal, for example, would continue or make greater use of existing frequent 

traveler programs.5

 These programs prescreen travelers to help speed their entrance 

into Canada and the United States and are a required component of the Travel 

Initiative under the Intelligence Reform and Terrorism Prevention Act.6

 Other 

proposals include the use of driver’s licenses with enhanced security features and a 

day pass—a document that could facilitate travel for individuals who take infrequent 

or spontaneous trips across the border.

As the statutory deadline for implementing DHS’s and State’s plans draws closer, 

questions have arisen about the agencies’ progress in carrying out the Travel 

Initiative. As part of our examination of the Travel Initiative, you asked us to provide 

a status report on the progress these agencies have made. On April 7, 2006, we 

briefed your office on our observations to date, which focused primarily on 

implementation along the northern border. This letter summarizes the information we 

provided you at that briefing. It addresses the following questions: 

• What steps have been taken and what challenges remain in implementing the 

Travel Initiative by the statutory deadline of January 2008? 

• What challenges have been identified with alternative documents or programs 

that have been suggested as substitutes for passports or PASS cards under the 

Travel Initiative? 

 3

A study commissioned by State estimated that 26 percent of the eligible citizen population in the United States have passports. 

A Study to Determine the Inaugural and Annual Demand for U.S. Passports by U.S. Citizens Living In and Traveling to 

Canada, Mexico, and the Caribbean; Phase Four: U.S. Land Border Passport Demand Survey, prepared for the Passport 

Services Office, Bureau of Consular Affairs, U.S. Department of State, by BearingPoint (October, 2005) 4

According to State, it is also examining the cost of a passport to see whether it can be reduced. 5

The United States and Canada operate two frequent traveler programs: NEXUS and FAST. NEXUS is for commuters who live in

border communities who frequently travel back and forth across the border. FAST is for truck companies and their drivers who

transport goods across the border. 6

The act requires DHS and State to seek to expedite the travel of frequent travelers, including those who reside in border

communities, and that, in doing so, they make readily available a registered traveler program.

Page 2 GAO-06-741R
 

To do our work, we interviewed DHS and State officials in Washington, D.C.; 

reviewed relevant laws and regulations; and examined documents and reports about 

the Travel Initiative and proposals for alternative documents and programs. We also 

interviewed DHS and State officials about existing border crossing programs, 

reviewed available documentation about these programs, and met with various local 

stakeholders in New York and Washington states to discuss their views about the 

Travel Initiative. We focused our initial work on the U.S.-Canadian border because 

the vast majority of concerns expressed about the Travel Initiative are from 

communities and states that border Canada. Our observations are based on the 

challenges faced by existing frequent traveler and other border-crossing programs as 

well as on our understanding of how the Travel Initiative is likely to be structured. 

Our work was conducted between January 2006 and May 2006 in accordance with 

generally accepted government auditing standards. Appendix I discusses our scope 

and methodology in more detail. 

Results 

DHS and State are within 20 months of the January 2008 deadline for implementing 

the Travel Initiative, and while the agencies have taken initial steps to carry out the 

program, broad and extensive challenges remain. The steps taken and the challenges 

that remain fall into five main areas: (1) making a decision about what documents 

individuals will need when they enter the United States, (2) resolving technical and 

programmatic issues related to PASS cards, (3) proceeding through the rule-making 

process, (4) carrying out a cost-benefit study, and (5) managing implementation of 

the program. Achieving the intended security benefits of the Travel Initiative by the 

statutory milestone date, without simply requiring all travelers to carry a passport, 

appears in jeopardy, given the volume of work that remains. Here is a summary of 

steps taken and the challenges that remain. 

• Documentary requirements: DHS still needs to decide what alternative 

documents, if any, will be acceptable in lieu of a passport when U.S. citizens 

and citizens of Canada enter or return to the United States—and, in some 

cases, what documentation individuals will have to present in order to obtain 

them. DHS and State have taken steps to propose or examine an alternative 

form of a passport, called a PASS card, or alternatives to a passport, such as 

frequent traveler programs and day passes, but final decisions are still in 

process. Determining documentary requirements is key to making decisions 

on how DHS inspects individuals entering or returning to the United States 

from Canada. Also, these decisions are the first steps needed to make progress 

toward meeting the mandate. 

• Implementing PASS cards: If DHS and State elect to proceed with a PASS card 

as an alternative form of a passport for U.S. citizens crossing land borders, 

they will still need to make key decisions about it. For example, DHS and State 

Page 3 GAO-06-741R 
have taken steps to identify the PASS card as a lower-cost alternative form of a 

passport, and they have had extensive discussions on which type of 

technology to use in a PASS card, but the issue remains unresolved.7

 One type 

of technology allows the cards to be read by equipment that is as much as 30 

feet away. For example, existing frequent traveler programs at land ports use 

this technology. A second type of technology requires the card to be read from 

close proximity. Deciding on a technology involves a broad set of 

considerations that include (1) utilizing security features to protect personal 

information, (2) ensuring that proper equipment and facilities are in place to 

facilitate crossings at land borders, and (3) enhancing compatibility with other 

border-crossing technology currently in use. Whatever technology is chosen, 

designing, developing, testing, and evaluating the card and reader system will 

take time. Once the cards and equipment are deemed suitable, DHS and State 

will need to develop and implement operating procedures and policies to issue 

and inspect the cards. Installation time for the reader equipment will also need 

to be factored in, if the PASS card option is implemented.8

 For example, not all 

land ports of entry currently have equipment to read documents, and existing 

equipment may not be compatible with the approach chosen. Other decisions 

on the PASS card that remain open include the cost of the card and equipment 

and whether the card will replace cards used in frequent traveler programs.9

• Rule-making process: To implement the Travel Initiative, DHS and State plan 

to issue three rules to establish (1) the documentary requirements for travel by

air and sea, (2) the requirements for using a PASS card, and (3) the 

documentary requirements for travel by land.10 Although DHS and State are not 

required to implement the law until January 2008, they have set an interim goal 

of implementing the rule for air and sea travelers a year early, or by January 

2007, as part of the strategy to implement all three rules by the 2008 deadline. 

This interim goal appears in jeopardy since DHS and State have yet to submit 

the rule to the Office of Management and Budget (OMB) for review and to the 

public for comment—both of which, along with the process of responding to 

comments received and modifying the rule as needed, can take up to 8 months 

or more to complete.11 Adding pressure to the schedule is the fact that the 

regulation is generally issued at least 2 months before it takes effect. DHS and 

State face no legal requirement to meet this self-imposed early deadline for the 

first rule, but being unable to do so will mean that more work will shift into the

1 year that remains. According to officials at State, the rule for air and sea has 

been drafted and is now in the final clearance process at DHS. 

 7

The technology that DHS and State are considering is called radio frequency identification (RFID). RFID is an automated datacapture technology that can be used to electronically identify, track, and store information contained on a tag. Identification and 

tracking capabilities are provided using wireless communication to transmit data. Current RFID applications include building 

access badges, highway toll collection, and supply chain management. 8

While the Intelligence Reform and Terrorism Prevention Act of 2004 addresses documentary requirements for certain crossborder travelers, it is silent on whether such documents should be read electronically. 9

According to officials at State, the department will issue and adjudicate the PASS card in the same way as traditional passports. 10In September 2005, DHS and State issued an advance notice of proposed rule making that invited the public to provide 

comments on possible means of implementing the Travel Initiative, including comments on documents other than passports that 

should be accepted. 11See appendix II for a more detailed description of the steps and potential time frames involved in the rule-making process.

Page 4 GAO-06-741R
 

• Cost-benefit study: One requirement of the rule-making process is that any 

decision on an approach must be preceded by a comprehensive and publicly 

disclosed cost-benefit study when the economic impact may be $100 million or 

more in any single year.12 This requirement could apply to decisions about 

documentation for crossing the border.13 DHS is in the early stages of studying 

costs and benefits, but much more work will be needed. For example, 

examining the costs of the new rules could involve studies of the extent to 

which the Travel Initiative discourages tourism and commerce by increasing 

the cost of acquiring needed documentation and by possibly creating delays at 

the border. In addition, policy guidance calls on agencies to analyze alternative 

actions, such as the use of frequent traveler programs, and to examine 

expected benefits, such as the expected reduction in lives lost, property 

damage, and disruptions to the economy as a result of reducing the likelihood 

of a terrorist attack. The requirement to include the Mexican border in the 

study further expands the scope and the work involved. Completing the study 

is dependent, in part, on knowing what kind of card and technology that DHS 

and State are likely to use—a decision that remains open. Appendix III 

provides more details on cost-benefit and other analytic requirements. 

• Managing implementation: Once decisions are made on what documents will 

be needed, DHS and State will face challenges in program implementation and 

management. Major challenges remain in developing (1) an implementation 

plan, (2) budget estimates, (3) awareness programs for the public, (4) training 

programs for DHS staff, (5) bilateral coordination with Canada, and (6) a 

common understanding of how the Travel Initiative links to the overall 

strategy for securing the nation’s borders. Falling short in any of these areas 

may hinder the ability of the agencies to achieve their goal of improving 

security while facilitating commerce and tourism. According to DHS officials, 

they have formed working groups to take action in each of these areas, but 

much more work remains in developing plans and approaches that improve 

the likelihood of program success. For example, DHS did not request funds for 

fiscal year 2007 to implement the Travel Initiative, and it remains unclear what 

funds DHS will need to install equipment or infrastructure to support the use 

of a PASS card by January 2008, if PASS is chosen. In contrast, State has 

developed and begun implementing plans for processing more passports in 

preparation for the Travel Initiative, and it has requested funds for fiscal year 

2007 to do so. For example, it has hired more staff to adjudicate an increase in 

passport demand. In addition, State and DHS have been involved in numerous 

 12Executive Order 12866—Regulatory Planning and Review—states that for any regulation that may result in an annual effect on 

the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, 

competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities, an agency 

must develop and submit a cost benefit analysis to OMB and make it available to the public after publication of the proposed

regulation in the Federal Register. While agencies must conduct an assessment of the potential costs and benefits for any rule 

deemed to be significant under the executive order, this more rigorous requirement is triggered by the $100 million threshold. 13A study commissioned by State estimated that 6.8 million, or about 51 percent, of all U.S. citizens who visited Canada in 2005 

did not possess a passport. If 2 million of these individuals purchased a PASS card for $50 in any single year, the Travel Initiative 

would meet the $100 million threshold. A Study to Determine the Inaugural and Annual Demand for U.S. Passports by U.S. 

Citizens Living In and Traveling to Canada, Mexico, and the Caribbean; Phase Four: U.S. Land Border Passport Demand 

Survey, prepared for the Passport Services Office, Bureau of Consular Affairs, U.S. Department of State, by BearingPoint

(October, 2005).

Page 5 GAO-06-741R 
outreach efforts to members of Congress and stakeholders in northern border 

communities, but much more remains to be done once key decisions are made 

on the program. 

The various alternative documents or programs proposed by federal agencies, the 

business community, and others as substitutes for a U.S. passport or PASS card all 

present major challenges as well. The suggested alternatives fall into three main 

categories: (1) frequent traveler programs, (2) driver’s licenses with enhanced 

security features and the capacity to denote citizenship, and (3) day passes. 

Appendix IV offers more details on these alternatives. Below we discuss the major 

challenges for each of these alternatives. 

• Frequent traveler programs for land crossings: Participants in these programs 

are required to undergo an application process that includes providing 

fingerprints, undergoing an interview with a DHS or Canadian officer, 

submitting evidence of citizenship and identity, and taking a digital 

photograph. The cards issued to participants show citizenship and identity 

and, according to DHS, are expected to meet the requirements of the Travel 

Initiative, including the requirement that DHS and State make readily available 

a registered traveler program. Furthermore, they would provide Canadian 

citizens with an alternative to a passport for entering the United States. While 

DHS could involve more U.S. and Canadian citizens who frequently cross the 

border in these programs, these documents may not be useful as alternatives 

to a passport for all travelers because (1) millions of U.S. and Canadian 

citizens who cross the northern border do so only once a year or once every 

several years and they may not want to incur the cost of a card, and (2) for the 

vast majority of individuals seeking to cross the border, application and 

processing times and requirements could be as extensive as for passports.14 In 

addition, several management and policy decisions would need to be made in 

order to make using frequent traveler programs a viable alternative under the 

Travel Initiative, including identifying the requirements for making these cards 

official travel documents and determining how to make the application 

process accessible to all citizens. DHS and State currently do not view these 

cards as official travel documents. 

• Driver’s licenses with enhanced security features: A number of stakeholders 

are advocating a driver’s license with enhanced security features as a 

substitute for a passport. They maintain that when states adopt driver’s 

licenses with enhanced security features in accordance with the REAL ID Act,

the document should be sufficient for land border crossings under the Travel 

Initiative.15 However, the new driver’s licenses will not show citizenship and 

therefore would not by themselves meet the legal requirements of the Travel 

 14Currently, less than 1 percent of U.S. citizens who cross the northern border are participants in frequent traveler programs. 15In May 2005, Congress passed legislation—known as the REAL ID Act of 2005 (Pub. L. No. 109-13, §§ 201-207, 119 Stat. 302,

311-316 )—that requires states that want their driver’s licenses to be accepted for official federal purposes to adopt standard

practices for adding enhanced security features in driver’s licenses by May 2008.

Page 6 GAO-06-741R
 

Initiative. Congress most likely would have to give states the statutory 

authority to determine citizenship and display it on driver’s licenses or 

establish a process for the federal government to determine the citizenship 

status of driver’s license applicants and provide this information to state 

authorities.16 This approach also would not enable Canadians to continue to 

enter the United States with a driver's license because Canadian driver's 

licenses would not be subject to any new enhanced security and citizenship 

requirements imposed in the United States. 

• Day passes:17 This alternative would likely involve having U.S. citizens fill out a 

pass application on the U.S. side of the border and show the pass upon their 

return to the United States. It could provide travelers with an option to cross 

the border without obtaining a passport and without making travel plans in 

advance. DHS has not decided whether a day pass would cover documentary 

requirements for Canadian citizens wanting to cross the border. However, 

there are many operational issues to consider, including (1) the process that 

DHS would use to verify a person’s identity and citizenship to obtain the pass; 

(2) the security features needed to be included on the day pass to prevent 

fraud and counterfeiting; (3) the additional facilities, infrastructure, and staff 

needed to issue a day pass; and (4) the training staff will need to process day 

pass requests. For example, U.S. facilities at popular border crossings would 

need the necessary space and personnel to accommodate and process the 

people who would need to stop, fill out their application forms, and have their 

documentation verified. This would take time and individuals may not view a 

day trip as worth the time it could take to obtain a pass. 

Concluding Observations 

DHS and State have taken some steps to carry out the Travel Initiative. However, they 

have a long way to go to implement their proposed plans, and the time to get the job 

done is slipping by. The many challenges that they face mirror the complexities and 

the nuances involved in developing a border security program that is a major cultural 

change in the way that individuals and commerce cross the U.S.-Canadian border. 

There are no easy alternatives to a passport or a PASS card that meet the legal 

requirement to show identity and citizenship. Alternative programs or documents, 

such as frequent traveler programs and driver’s licenses with enhanced security 

features, have their own set of challenges, and using them in lieu of a passport will 

not easily resolve the management issues faced by DHS and State. These conditions, 

coupled with the significant cross-border commerce and tourism, heighten the need 

to take care in planning, evaluating, testing, and implementing an approach that 

ultimately improves security at the northern border without adversely affecting 

 16The REAL ID Act does not specifically allow or require states to show citizenship on driver’s licenses. A driver’s license with

citizenship information on it could be controversial if it were perceived as a national identification card since concerns have

been raised about such cards in regards to individuals’ privacy and freedom to travel. 17Unlike frequent traveler programs that DHS has operated for several years, the proposal to use a day pass has recently

surfaced, and it is in the very early stages of consideration.

Page 7 GAO-06-741R 
commerce and tourism in a significant way. Attempting to address these challenges 

under what appears to be an ambitious schedule adds uncertainty and risk. 

Agency Comments and Our Evaluation 

We provided a draft of this report to DHS and State for comment. DHS did not have 

official comments on our draft, but did provide technical comments which we 

incorporated in this report where appropriate. 

In its official comments, State generally agreed with the challenges we described in 

the draft report, but expressed concern that our concluding observations did not 

adequately recognize various steps it had taken to carry out the program. State 

provided examples of actions it had taken in several areas, such as proceeding with 

the rulemaking process, estimating the increase in passport demand, developing the 

PASS card, examining the cost of a passport, and carrying out an outreach effort to 

members of Congress and the public. We revised the report where appropriate to 

recognize the steps taken by State in these areas. These steps notwithstanding, we 

continue to believe that the work remaining for both DHS and State, the complexities 

and nuances involved, and the time required to complete the implementation steps 

present a challenge for the agencies to meet the statutory deadline. State’s official 

comments are reprinted in appendix V. 

_ _ _ _ _ _ 

As arranged with your offices, unless you publicly announce its contents earlier, we 

plan no further distribution of this report until 30 days after its issue date. At that 

time, we will send copies of this report to interested congressional committees and 

subcommittees. We will also make copies available to others on request. In addition, 

this report will be available at no charge on GAO’s Web site at http://www.gao.gov. 

Page 8 GAO-06-741R
 

If you or your staff have any questions about this report or wish to discuss the matter 

further, please contact me at (202) 512-8777 or stanar@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found on the last 

page of this report. Other key contributors to this report were John Mortin, Assistant 

Director, Neil Asaba, Chuck Bausell, Frances Cook, Richard Hung, Sara Margraf, 

Amanda Miller. 

Richard M. Stana 

Director, Homeland Security and Justice Issues 

Page 9 GAO-06-741R 
Appendix I

Scope and Methodology

While the Travel Initiative applies to citizens of Bermuda, Canada, and Mexico 

entering the United States from certain countries in North, Central and South 

America, we focused our initial work on the U.S.-Canadian border because the vast 

majority of concerns expressed about the Travel Initiative were from communities 

and states that border Canada. To determine what steps have been taken and what 

challenges remain, we reviewed several announcements by DHS and State on their 

plans and schedule for carrying out the initiative. At DHS and State headquarters, we 

met with program officials in charge of carrying out the Travel Initiative and talked to 

them about the current status of the program. We also reviewed key procedures for 

carrying out cost-benefit studies, and we discussed the process for issuing new 

regulations with DHS lawyers involved in the rule-making process. We also reviewed 

reports on border security with Canada. As part of our work, we met with local 

stakeholders, such as officials from the Bellingham/Whatcom County Chamber of 

Commerce (Washington) and the Buffalo Niagara Partnership (New York), who have 

expressed concern to members of Congress regarding the initiative and the economic 

impact it might have on northern border communities. We reviewed pertinent laws 

and regulations related to the Travel Initiative and other documents provided by DHS 

and State. Our ability to analyze these challenges was limited because key decisions 

about the program have not yet been made. To determine what challenges have been 

identified with alternative travel documents or programs that have been suggested as 

substitutes for passports or PASS cards under the Travel Initiative, we reviewed 

program documents on frequent traveler programs, such as NEXUS—a DHS program 

for commuters who live in border communities who frequently travel back and forth 

across the border—and FAST—a program for truck companies and their drivers who 

transport goods and commerce across the border. We selected and visited ports of 

entry in Blaine, Washington, and Buffalo, New York, because of their geographic 

location and because each has NEXUS and FAST facilities. We also visited Alexandria 

Bay, New York, because of its proximity to Buffalo, New York. At all three locations, 

we met with staff in charge of border-crossing programs to gain a better 

understanding of border-crossing procedures, infrastructure, and technology. Our 

work was conducted between January 2006 and May 2006 in accordance with 

generally accepted government auditing standards. 

Page 10 GAO-06-741R
 

Appendix II

General Overview of the Federal Rule-Making Process

This appendix provides an overview of the steps in the rule-making process for a 

significant regulatory action under Executive Order 12866 and the potential time 

involved for some of the steps. 

Step 1: Agency (or agencies, if a joint rule) completes development of the notice of 

proposed rule making (NPRM), which includes the proposed rule and supplemental 

information.18

Step 2: Agency submits the draft NPRM and supporting materials, including any 

required cost-benefit analysis, to the Office of Management and Budget (OMB) for 

review. 

Step 3: OMB reviews the draft NPRM and supporting materials and coordinates 

review of the proposed rule by any other agencies that may have an interest in it. 

Step 4: OMB notifies the agency in writing of the results of its review, including any 

provisions requiring further consideration by the agency, within 90 calendar days 

after the date of submission to OMB.19

Step 5: OMB resolves disagreements or conflicts, if any, between or among agency 

heads or between OMB and any agency; if it cannot do so, such disagreements or 

conflicts are resolved by the President or by the Vice President acting at the request 

of the President. 

Step 6: Once OMB notifies the agency that it has completed its review without any 

requests for further consideration, the agency reviews the NPRM and publishes it for 

public comment in the Federal Register.

Step 7: Agency is to give the public a meaningful opportunity to comment on the 

proposed rule, which generally means a comment period of not less than 60 days. 

 18An agency may also begin this process with an advance notice of proposed rule making that seeks comments and suggestions 

from the public on the potential content of a forthcoming NPRM, but this step is not required by law or executive order in most

cases. 19Executive Order 12866 provides that, for rules governed by a statutory deadline, the agency shall, to the extent practicable,

schedule rule-making proceedings so as to permit sufficient time for OMB review. It also provides that when an agency is

obligated by law to act more quickly than normal review procedures allow, the agency shall comply with the requirements to

submit the proposed rule and required supporting materials to OMB, “to the extent practicable.”

Page 11 GAO-06-741R 
Appendix II

Step 8: Once the comment period has closed, the agency reviews the comments 

received, makes appropriate revisions to the proposed rule, and prepares a notice of 

the final rule, including supplemental information with responses to comments 

received.20

Step 9: Agency submits draft notice and final rule, including updated supporting 

materials or cost-benefit analysis, to OMB for review. 

Step 10: OMB reviews the draft notice, final rule, and supporting materials; 

coordinates review by any other agencies that may have an interest in the rule; and 

notifies the agency of the results within 90 calendar days after the date of submission 

to OMB.21

Step 11: Once OMB notifies the agency that it has completed its review without any 

requests for further consideration, the agency reviews the rule one more time and 

generally publishes the final rule and supplemental information in the Federal 

Register at least 60 days before the new rule takes effect. 

 20If the final rule is materially different from the proposed rule, possibly because of new issues raised or other important legal or

substantive developments during the comment period, an agency may decide to publish it as a proposed rule instead with a 

second comment period. This approach helps the agency provide sufficient notice and opportunity for public comment on how 

the rule addresses the new issues or developments, but it delays implementation of the final rule. 21This time period is reduced to 45 days if OMB has previously reviewed the rule and supporting information and there has been

no material change in the facts and circumstances upon which the rule is based.

Page 12 GAO-06-741R
 

Appendix III 

Summary of Federal Guidelines for Cost-Benefit Analysis and Other Analytic 

Requirements

Section 6(a)(3)(C) of Executive Order 12866 (Regulatory Planning and Review) and 

OMB Circular A-4 provide guidance to federal agencies involved in developing a costbenefit analysis for a rule that may have an annual effect on the economy of $100 

million or more or adversely affect in a material way the economy or certain other 

sectors.22 OMB designed this guidance to standardize the way benefits and costs of 

federal regulatory actions are measured and reported. Besides calling on agencies to 

estimate the overall benefits and costs of a proposed rule, this guidance stipulates 

that an agency’s cost-benefit analysis should provide a separate description of 

distributional effects (i.e., how both benefits and costs are distributed among 

populations of particular concern) so that decision makers can properly consider 

them along with the effects on economic efficiency. 

Another area of the guidance deals with the scope of the analysis as it pertains to 

effects outside the United States. While the guidance notes that analysis should focus 

on benefits and costs that accrue to citizens and residents of the United States, it also 

states that where an agency chooses to evaluate a regulation that is likely to have 

effects beyond the borders of the United States, these effects should be reported 

separately.

OMB Circular A-4 also reminds agencies that in preparing analytical support for rule 

making, there are a number of analytic requirements imposed by law and executive 

order that are in addition to the regulatory analysis requirements of Executive Order 

12866. An agency should consider whether the rule will need specialized analysis of 

any of the following issues.23

 

• Impact on small businesses and other small entities: Under the Regulatory 

Flexibility Act (5 U.S.C. §§ 603-604), agencies must prepare an initial and a 

final regulatory flexibility analysis (RFA) if the rule making could have a 

significant impact on a substantial number of small entities. Circular A-4 

provides that an agency should consider posting its RFA on the Internet so the 

public can review its findings. 

Circular A-4 also states that an agency should have guidelines on how to 

prepare an RFA and encourages agencies to consult with the Chief Counsel for 

Advocacy of the Small Business Administration on expectations concerning 

what is an adequate RFA. Executive Order 13272 requires an agency to notify 

 22

OMB Circular A-4 (2003). 23OMB Circular A-4 requires agencies to address seven issues to determine whether a specialized analysis will be needed. In this 

appendix, we included only those that may pertain to the Travel Initiative.

Page 13 GAO-06-741R 
Appendix III 

the Chief Counsel for Advocacy of any draft rules that might have a significant 

economic impact on a substantial number of small entities. 

• Analysis of unfunded mandates: Under the Unfunded Mandates Act 

(2 U.S.C. § 1532), an agency must prepare a written statement about benefits 

and costs prior to issuing a proposed or final rule (for which the agency 

published a proposed rule) that may result in aggregate expenditure by state, 

local, and tribal governments, or by the private sector, of $100 million or more 

in any year (adjusted annually for inflation). According to OMB, an agency’s 

analytical requirements under Executive Order 12866 are similar to the 

analytical requirements under this act, and thus the same analysis may permit 

it to comply with both analytical requirements. 

• Information collection, paperwork, and record-keeping burdens: Under the 

Paperwork Reduction Act (44 U.S.C. §§ 3506-3507), an agency will need to 

consider whether its rule making (or other actions) will create any additional 

information collection, paperwork, or record-keeping burdens. These burdens 

are permissible only if it can justify the practical utility of the information for 

the implementation of its rule. OMB approval will be required of any new 

requirements for a collection of information imposed on 10 or more persons, 

and a valid OMB control number must be obtained for any covered paperwork. 

According to Circular A-4, an agency's Chief Information Officer should be 

able to assist it in complying with the Paperwork Reduction Act. 

Page 14 GAO-06-741R
 

Appendix IV

Alternatives Proposed for Use under the Travel Initiative and Their Suitability for Use 

in Lieu of a Passport

We reviewed several alternative documents or programs that have been proposed as 

substitutes for a passport under the Travel Initiative. Table 1 summarizes several 

alternatives that have been proposed for the U.S.-Canadian land border. For 

comparison purposes, we also include Canadian and U.S. passports in the table. 

Frequent traveler programs refer to the NEXUS and FAST programs, which operate 

along the northern border.24 NEXUS is for commuters who live in border communities 

who frequently travel back and forth across the border, and FAST is for truck 

companies and their drivers who transport goods across the border. Driver’s licenses 

with enhanced security features are required under the REAL ID Act.

25 The act 

requires states that want their driver’s licenses to be accepted for official federal 

purposes to adopt standard practices for adding enhanced security features in 

driver’s licenses by May 2008. The act does not specifically require states to show

citizenship on driver’s licenses. 

Because DHS and State have not made a final decision as to which alternative to 

implement or whether to implement one at all, our assessment is based upon the 

information we obtained from interviews with DHS and State officials and 

announcements made by the agencies. 

 24Since we are focusing our work on the northern border, we did not include SENTRI, a frequent traveler program for those 

crossing the southern border, in our evaluation. 25Pub. L. No. 109-13, §§ 201-207, 119 Stat. 302, 311-316 (2005).

Page 15 GAO-06-741R 
Appendix IV

Table 1: Alternatives Proposed for Use under the Travel Initiative for the U.S.-Canadian Land Bordera 

Establishes 

citizenship 

Establishes 

identity 

Available to

U.S. citizens 

Available to

Canadian

citizens Cost

Document 

validity 

PASS card Undecided Undecided

Frequent traveler 

programs 

$50 USD 

$80 CAN 

5 years 

Enhanced 

driver’s licenses

Varies by

state law 

Varies by 

state law 

Day passes Undecided Undecided Undecided Undecided Undecided Undecided 

U.S. passportb $97 USD 10 years 

Canadian 

passportc

$87 CAN 5 years 

Source: GAO analysis of DHS and State data. a

According to DHS officials, other documents that could be considered are U.S. military identification and

American Indian/tribal identification. b

The cost of a U.S. passport is $97 USD for an adult 16 years and older and is valid for 10 years. The cost of a 

U.S. passport for a child under 16 is $82 USD and is valid for 5 years. c

Canadian passports issued to Canadians living in Canada cost $87 CAN. For those Canadians living in the 

United States, the cost to obtain a Canadian passport is $97 CAN. For those Canadians living elsewhere, the 

cost to obtain a passport is $100 CAN. 

Page 16 GAO-06-741R
 

Appendix V

Comments from the U.S. Department of State

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