In 1996, SAMHSA issued a regulation implementing the Synar amendment. The regulation requires all 50 states, the District of Columbia, and eight insular areas to (1) have in effect and enforce laws that prohibit the sale and distribution of tobacco products to people under 18 years of age, (2) conduct annual random, unannounced inspections, using a valid probability sample of outlets that are accessible to youth, of all tobacco outlets within the state to estimate the percentage of retailers who do not comply with the laws, and (3) report the retailer violation rates to the Secretary of HHS in their annual SAPT block grant applications. SAMHSA requires that each state reduce its retailer violation rate to 20 percent or less by fiscal year 2003. SAMHSA and each state negotiated interim annual target rates that states are required to meet to indicate their progress toward accomplishing the 20 percent goal. Beginning in fiscal year 1997 for most states and in subsequent years for all states, the Secretary can withhold 40 percent of a state’s Substance Abuse Prevention and Treatment (SAPT) block grant award if it does not comply with the rate reduction requirements. State fiscal year 2000 SAPT block grant awards ranged from about $2.5 million to $223 million. Also in 1996, SAMHSA provided guidance to states on implementing Synar requirements. SAMHSA issued sample design and inspection guidanceto help states comply with the Synar requirement for conducting random, unannounced inspections of tobacco outlets to estimate the statewide violation rate. The guidance consists primarily of recommended strategies to give states flexibility in selecting a sample design and inspection protocol tailored to their particular circumstances, including state and local laws. For example, SAMHSA’s inspection protocol guidance suggests that states recruit minors to attempt to purchase tobacco products when conducting inspections but gives states some flexibility regarding the ages of the minors that are used. SAMHSA’s guidance requires states to develop and implement a consistent sample design from year to year and a standardized inspection procedure for all inspections so that measurements of violation rates over time are comparable across jurisdictions within a state. SAMHSA’s guidance includes a Synar requirement that the states enforce their laws in a manner that can reasonably be expected to reduce the extent to which tobacco products are available to minors. The guidance suggests that states use a variety of activities in their enforcement strategy, such as merchant education, media and community involvement, and penalties. The enforcement activities could be conducted by different agencies, such as those responsible for substance abuse prevention and treatment programs, law enforcement, and state health departments. SAMHSA reviews state-reported information to determine whether states have complied with requirements for enforcing state laws and conducting random unannounced inspections of retail tobacco outlets. In addition to requiring states to provide evidence of their enforcement activities, SAMHSA requires states to provide their sampling methodology, inspection protocol, and tobacco outlet inspection results in their annual SAPT block grant applications. In its review, SAMHSA and its contractordetermine whether (1) the sample size is adequate to estimate the statewide violation rate and all tobacco outlets (including over-the-counter and vending machines) in the state have a known probability of being selected for inspection; (2) the state assessed the accuracy of lists used to identify the universe of tobacco outlets from which its sample is drawn; (3) the sample design and inspection protocols are consistently implemented each year within the state; and (4) the statewide violation rate is correctly calculated, meets the negotiated annual target, and shows progress toward the 20-percent goal. When data provided in the application are not sufficient to determine state compliance, SAMHSA requests additional information from the state before a final decision on state compliance is made. SAMHSA collects the state-reported data from the SAPT block grant applications and in 1996, began storing it in an automated database. These data are used to monitor states’ compliance with Synar requirements, compare state progress from year to year, and produce an annual report to the Secretary of HHS and the Congress on Synar implementation. SAMHSA also uses the data to help finalize the states’ annual retailer violation rates, which are released to the public. For fiscal years 1997 through 1999, the states’ reported violation rates showed an overall increase in retailer compliance with state laws prohibiting the sale of tobacco products to minors. The median retailer violation rate declined from 40 percent in 1997 to 24.2 percent in 1999. Violation rates range from 7.2 percent in Florida to 72.7 percent in Louisiana for 1997 and from 4.1 percent in Maine to 46.8 percent in the District of Columbia for 1999. SAMHSA has cited 10 states over the 3-year period for being out of compliance with Synar requirements because they did not reach their violation-rate target. The Secretary of HHS, however, has not reduced any state’s SAPT block grant for noncompliance with Synar. In fiscal years 1997 and 1998, states that failed to comply with Synar requirements were not assessed a penalty because they successfully argued that there were extraordinary circumstances that hindered their inspection efforts. The states that were faced with a potential penalty by the Secretary of HHS for failing to reach their fiscal year 1999 target rates chose to commit additional funds to ensure compliance with the following year’s violation- rate target. State Synar implementation practices and SAMHSA oversight adversely affect the quality and comparability of state-reported retailer violation rates. Although SAMHSA approved states’ sample designs, inspection protocols, and inspection results, the quality of the estimated statewide violation rates reported for fiscal years 1998 and 1999 is undermined because of several factors: First, some states used inaccurate and incomplete lists from which to select samples of tobacco outlets to inspect. Second, most states used minors younger than 16 to inspect tobacco outlets, and SAMHSA instructed the states to tell minors not to carry identification on inspections. Both of these protocols tend to lower the violation rate. Third, SAMHSA approved some states’ violation rates even though they included invalid inspections. Fourth, SAMHSA relied on states to validate violation rates without ensuring that the accuracy of the supporting data was verified, even though a potential reduction in a state’s block grant award for not complying with Synar could be an incentive to report artificially low rates. These data quality factors, coupled with the lack of standardization in the protocols states use when inspecting outlets, limit the comparability of retailer violation rates across states. According to SAMHSA officials, some states used inaccurate and incomplete lists to select random statistical samples of tobacco outlets to inspect, which could have affected the validity of the samples and compromised violation rates reported for fiscal years 1998 and 1999. Most states used a list-based sampling methodology in their sample design, as SAMHSA recommends. When states use list-based sampling to select a sample of tobacco outlets for inspection, SAMHSA requires that they report evidence that they have verified the accuracy and completeness of lists for both over-the-counter and vending machine outlets. However, we found that for fiscal year 1998, 40 states reported to SAMHSA that they did not know the accuracy of the lists they were using. States can use different lists to develop their population of tobacco outlets, but the accuracy and completeness of these lists vary. For example, states can use lists of state-licensed tobacco outlets, but these lists are not always updated by the responsible state agencies. Also, national and state commercial listings can be used, but they often contain many establishments that do not sell tobacco products or may identify the owners of the business but not necessarily each retail outlet. In some rural areas and Midwestern states, developing a complete list of outlets can be difficult because tobacco products are sometimes sold from individuals’ homes or other places that are not known to be tobacco outlets. Comments made by several state officials indicate a need by some states for more technical assistance from SAMHSA in addressing state-specific issues—particularly sample design—that affect their compliance with Synar. Accurately identifying the population of vending machine outlets accessible to youth in a state is also important, according to SAMHSA’s fiscal year 1997 report of Synar implementation and other documents, because vending machines have been a major source that children use to obtain tobacco products. In our review of the state data that SAMHSA provided from SAPT block grant applications for fiscal year 1999, we found that of the 37 states reporting that they inspected vending machine outlets, 11 did not report the population of vending machines accessible to youth in their states as SAMHSA requires. (See app. I) Further, our review of a few block grant applications showed that states reported that they inspected vending machine outlets when they found them during random inspections of over-the-counter outlets. Some states have had difficulty developing accurate and complete lists of vending machine outlets, in particular, because many of the machines are privately owned and their portability makes them difficult to track. Officials we interviewed told us that over the years there has been a significant decline in vending machine tobacco outlets accessible to minors. However, an NGA representative said that vending machines are and will continue to be a source of tobacco products for minors in some states. The results of a 1999 national survey of middle school and high school students’ access to cigarettes show that vending machines continue to be a source of tobacco products for youth, particularly middle school students. For example, when students were asked where during the past 30 days, they bought their last pack of cigarettes, 2.7 percent of the high school students reported that their purchase was from vending machines. However, 12.9 percent of middle school students reported their last pack of cigarettes was purchased from vending machines. SAMHSA officials told us that states need to be more aggressive in identifying tobacco outlets. An NGA study of best practices in implementing and enforcing Synar requirements notes that programs that require tobacco retailers to be licensed provide an effective source of information for identifying the outlets.