The current rule requires all travellers, including children, to have a valid passport when entering the US by air. (Effective  June 2009 travellers by land and sea will also require passports).  However, the DHS said last week that it would propose exempting children from the passport rule, as it relates to crossing land and sea borders.
 
Under the new proposal, US and Canadian children 15 years and younger, with parental consent, would be permitted to enter the US with a certified copy of their birth certificate.

US and Canadian travellers between the ages 16 through 18 travelling with public or private school groups, religious groups, social or cultural organizations or youth athletic teams, would also have a similar waiver.

The Canadian and American travel industry had raised strong concerns that the passport rule would have a negative impact on family travel due to the high cost of acquiring passports. Likewise, they were concerned that youth travel and school groups would suffer.
 
As of January 23, this year, airline passengers entering the US from other countries in the Western Hemisphere are required to be in possession of a valid passport. The passport requirement for land and seaport border crossings becomes effective in June 2009.