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According to a comment by @ZachLipton:

I believe the US used to allow transits without visas in certain circumstances (and a similar program called international-to-international) for people who would otherwise need visas, even without exit checks (the airline was responsible for making sure you didn't wander off, generally by holding your passport and escorting you around). It was completely ended in 2003 due to security concerns.

What was the exact name of this program and how did it work?

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According to a DHS press release from 2 August 2003 announcing the suspension of the TWOV and ITI programs effective on that date:

The Transit Without Visa program has been in use in the United States since 1952. It applies to passengers who normally would be required to obtain a visa to travel to the United States. Under the TWOV program, passengers arriving in the United States from a foreign country are permitted to travel through the United States to another foreign destination without first obtaining a visa to stop and change planes in the United States. Passengers under the TWOV program go through the full border inspection process upon arrival in the U.S. Under the TWOV program, a passenger may stop at one or two U.S. airports en route to another foreign destination. If on a domestic flight to a second U.S. airport, the airline is responsible for ensuring that the passenger does not illegally enter the United States. Airlines provide contract security escorts and are required to maintain control of the passenger’s passport and other travel documents.

The International-to-International transit program also allows passengers arriving from foreign countries to transit through the United States to another foreign destination without first obtaining a visa. Unlike the TWOV program, however, ITI passengers may only transit through one airport, and they may not leave the international transit lounge while connecting planes at that airport.

In 2003 when the program was suspended, the relevant regulations (8 CFR 212.1(f)) said:

(1) Transit without visa. A passport and visa are not required of an alien who is being transported in immediate and continuous transit through the United States in accordance with the terms of an agreement entered into between the transportation line and the Service under the provisions of section 238(d) of the Act on Form I–426 to insure such immediate and continuous transit through, and departure from, the United States en route to a specifically designated foreign country: Provided, That such alien is in possession of a travel document or documents establishing his/her identity and nationality and ability to enter some country other than the United States.

(2) Unavailability to transit. This waiver of passport and visa requirement is not available to an alien who is a citizen of Afghanistan, Angola, Bangladesh, Belarus, Bosnia-aherzegovina [sic], Burma, Burundi, Central African Republic, People’s Republic of China, Colombia, Congo (Brazzaville), Cuba, India, Iran, Iraq, Libya, Nigeria, North Korea, Pakistan, Serbia, Sierra Leone, Somalia, Sri Lanka, and Sudan.

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    I wasn't really an international traveler back then, but my understanding is that the only US airport that ever had an international transit lounge was (and still is) ANC. I would like to hear if there were others. I wasn't able to find anything online. – Michael Hampton Dec 2 at 22:12
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    If I remember correctly, LAX had a small one specifically for passengers traveling between South Korea and Brazil on Korean Air's ICN-LAX-GRU service. However, that flight ended in 2016. I seem to recall that they had a small area for transiting passengers to wait before re-boarding the flight that didn't require them to clear U.S. immigration, but I don't remember all of the details and am having trouble finding them in a quick search. – reirab Dec 3 at 8:10
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    When I had a layover in LA (I do not remember which airport) on my way from London UK to Auckland New Zealand, we transfer passengers were guided into a separate area and did not have access to the main terminal. This was in October 1999. – Willeke Dec 3 at 11:22

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