At first I thought this was a tough dilemma. (I'm not a parent.) But now it is clear to me that the advice above is correct. You ought not to just sit on this information. You are an adult; she is a child. There is something a little off in her seeing you as a buddy that she can disclose wrong and dangerous behavior to. (I mean, it's good that she told you. But I think she has a misconception of what a trusting relationship is about.)

I agree with Krazy that the fact that this is illegal behavior heightens the seriousness and your level of responsibility. In order for an underage person to access alcohol, I would guess that she has a chain of connections that ends in an adult who is willing to be the procurer/provider of the alcohol. That person is truly guilty of serious criminal behavior (contributing to the delinquency of a minor.) That person deserves to be slammed by the law.

I had a family member who was drinking at age 15. Two other family members knew and did not "tell" on her. In retrospect, I do not think they made the right decision. She got in deeper trouble, which we can pretty much assume will happen to your sister-in-law. There maybe some dysfunction in her home that has led to her behaving this way. It sounds like she has too much freedom to go her own way . . . too much lack of accountability. Her parents, I would say, are under-involved in her life. I think that is what she is looking for from you . . . an adult to be involved. So show her what adults appropriately do when children are straying into unacceptable behavior.

It just occurred to me to ask something else. What about your husband, her brother? If he is in any way level headed, then he should be told and he can sit down with Mother-in-law and make her aware of the reality that this young lady is hanging with peers who are troubled. (I doubt she goes off by herself to engage in drinking.) Another danger, is that she is about 5 minutes away from becoming sexually active, if she's not already. I think I would start by telling your husband. You might need to impress upon him that he needs to stay calm. Then the two of you can sit down with kid-sister and, hopefully, reach an agreement that the meeting needs to be expanded to include her Mom.

The thing that is holding you back is that you fear betraying her confidence. You imagine that it might be safer for her to know she can talk to you without worrying that you will tell anyone. Nothing good will come out of that. It would be different if she came to you looking for advice. Doesn't sound like that is the case. If you sit on this info, then you are giving her the impression that it is no big deal. I think she is using you to test that out. The clock is ticking. She is ten minutes away from using illegal drugs and eventually being arrested and having a record that will blight her chances for a good future. If you feel you can't do what the replies above advise, then I would say to her that I would have to report anything further that she discloses to her brother. Do not try to put yourself in the role of surrogate mom/big sister to her. You'll end up in an impossible situation. Be what you are - a caring "in-law" who is an adult. There is a good chance that she is irretrievable on the road to becoming someone whom you will eventually have to distance yourself from. I would tell her THAT, rather then send the message that "I would do anything for you." The latter implies "enabling."