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If you are a citizen of a country that participates in the Visa Waiver Program (VWP), and you enter the U.S. by land from Mexico or Canada, you are only required to complete the paper I-94W form at the land border crossing. ESTA is currently required for air and cruise ship travel only.
Note: VWP citizens do not need an ESTA to travel on the ferries between Vancouver and Victoria, BC and Washington state. They are treated as a land border port.