[Federal Register Volume 60, Number 174 (Friday, September 8, 1995)]
[Rules and Regulations]
[Pages 46749-46750]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-22316]



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 Rules and Regulations
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  Federal Register / Vol. 60, No. 174 / Friday, September 8, 1995 / 
Rules and Regulations  


[[Page 46749]]


OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 591

RIN 3206-AG73


Cost-of-Living Allowances (Nonforeign Areas)

AGENCY: Office of Personnel Management.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Personnel Management (OPM) is issuing two 
regulatory changes in the nonforeign area cost-of-living allowance 
(COLA) program. One change will clarify a reference in the regulations 
to examples of criteria we use for comparing housing between the 
allowance areas and Washington, DC. The second change will allow the 
payment of foreign area post differentials without any corresponding 
offset from the nonforeign area COLA. OPM is also changing the timing 
of living-cost surveys conducted in Hawaii, Guam, Puerto Rico, and the 
U.S. Virgin Islands. These changes will improve administration of the 
nonforeign area COLA program.

DATES: These regulations are effective October 10, 1995. These 
regulations are applicable on the first day of the first pay period 
beginning on or after October 10, 1995.

FOR FURTHER INFORMATION CONTACT:
Allan G. Hearne, (202) 606-2838.

SUPPLEMENTARY INFORMATION: Under section 5941 of title 5, United States 
Code, and Executive Order 10000, as amended, certain Federal employees 
in nonforeign areas outside the 48 contiguous States are eligible for 
cost-of-living allowances (COLA's) when local living costs are 
substantially higher than those in the Washington, DC, area. Nonforeign 
area COLA's are paid in Alaska, Hawaii, Puerto Rico, the U.S. Virgin 
Islands, and Guam and the Commonwealth of the Northern Mariana Islands.
    OPM published proposed rules on May 11, 1995 (60 FR 25150), to 
improve administration of the program by--
    (1) Permitting the survey and analysis of living costs at fewer 
income levels than the three levels currently used;
    (2) Clarifying the types of housing units to be surveyed; and
    (3) Allowing the payment of foreign area post differentials without 
any corresponding offset from the nonforeign area COLA.
    OPM also announced for comment its intention to change the timing 
of living-cost surveys conducted in Hawaii, Guam, Puerto Rico, and the 
U.S. Virgin Islands, although this change did not require a change in 
regulation.
    There were five respondents to the proposed regulations. In the 
discussion that follows, we address the comments that we received on 
each issue and provide our response.

Number of Income Levels Surveyed

    We received four comments on the proposal to use only one income 
level in the surveying of living costs. Each of the four commenters 
expressed concerns about the impact of the proposed change on COLA 
rates. One of the commenters favored continued use of the current 
three-level surveying methodology because of the possibility that the 
proposed change would not accurately reflect the actual costs of COLA 
area employees. The other three commenters presented arguments in favor 
of further study of the issue.
    In light of these comments, we have decided not to make the change 
at this time. OPM will review the issue further in preparation for its 
report to Congress under the Treasury, Postal Service and General 
Government Appropriations Act, 1992 (Pub. L. 102-141), as amended. The 
comments received in response to the proposed regulation will be 
considered by OPM in its review.

Types of Housing Units Surveyed

    We proposed to clarify a parenthetical phrase in current 
regulations concerning the types of housing units surveyed. We received 
four comments on this issue. Three commenters agreed with the change, 
although one said that if the cost index for any COLA area were 
unintentionally lowered, the change should be revoked. One commenter 
objected to the change, stating that new homes with their modern 
architectural preferences, greater amenities, and lower maintenance 
needs are more valuable than old homes. The commenter added that a 
comparison of new homes in Washington, DC, with old homes in COLA areas 
would not be fair and reasonable.
    The parenthetical phrase ``(type, size, age)'' in 5 CFR 
Sec. 591.205(b)(3) was intended to list examples of the standard 
shelter specifications that could be used for comparing housing in the 
COLA areas with the Washington, DC, area. Because we were not always 
able to obtain age data on the housing units surveyed, we proposed to 
remove ``age'' from the listing so as not to give the impression that 
age was in fact being used in the calculations.
    In response to the comments, we are instead prefacing ``type, size, 
age'' with ``e.g.,'' to make clear that these are examples of the 
specifications that could be used. We will continue to attempt to 
obtain age data and may apply age criteria for comparison of housing. 
If this proves feasible, we will provide a description of the exact 
procedures in a later Federal Register notice.

Nonforeign Area COLA and Foreign Post Differentials

    We further proposed to eliminate the requirement in Sec. 591.210(d) 
that an employee's nonforeign area COLA be reduced if the employee also 
receives a foreign area post differential and the two payments combined 
would otherwise exceed 25 percent of basic pay. This created a 
disincentive for employees in nonforeign allowance areas to accept 
long-term temporary assignments in foreign areas. The four comments we 
received on this proposal all agreed with the change.
Survey Timing

    We also announced our intention to change the timing of the summer 
COLA surveys to correspond with the winter COLA surveys. This does not 
involve a regulatory change.
    We received three comments on this proposal, all of which supported 
the change, although one respondent reserved full comment pending an 
opportunity to review the information upon which we based our decision. 
Therefore, in view of the potential benefit to the public and the 

[[Page 46750]]
Government of this change and in anticipation of its minimal impact on 
COLA rates, OPM plans to conduct its living-cost surveys in Hawaii, 
Guam, Puerto Rico, and the U.S. Virgin Islands in the first quarter of 
the calendar year beginning with the next survey, which will be 
conducted in the first quarter of calendar year 1996.

General Comments

    One commenter expressed concern that OPM issued the proposed 
regulations at a time when a broad examination of the COLA program is 
scheduled. The commenter felt that some of the changes could have a 
substantial impact on the program and that the 30-day comment period 
was not enough time to fully analyze their effect.
    Except for the proposed technical clarification relating to 
standard shelter specifications, all of the changes we proposed were 
based on comments and recommendations we received on previously 
published living-cost survey reports. In fact, this particular 
commenter had proposed, on several previous occasions, analyzing living 
costs at only one income level, and we had addressed this issue 
specifically in several previous Federal Register notices. Therefore, 
because we were proposing to adopt recommendations that commenters had 
previously provided on issues that were not new, we believed that 30 
days was sufficient time to review and comment on our proposals. In the 
future, however, OPM will continue to provide, whenever practical, at 
least 60 days for interested parties to review and comment on proposals 
relating to the COLA program.
    One commenter responded generally to the cost of housing and 
grocery items in Alaska and expressed concern about any reduction in 
COLA rates. These final regulations will have no effect on the COLA 
rates payable in Alaska. Furthermore, Pub. L. 102-141, as amended, 
prohibits any reductions in COLA rates through December 31, 1996.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because it will affect 
only Federal agencies and employees.

List of Subjects in 5 CFR Part 591

    Government employees, Travel and transportation expenses, Wages.

Office of Personnel Management.
James B. King,
Director.
    Accordingly, OPM is amending 5 CFR part 591 as follows:

PART 591--ALLOWANCES AND DIFFERENTIALS

Subpart B--Cost-of-Living Allowance and Post Differential--
Nonforeign Areas

    1. The authority citation for subpart B of part 591 continues to 
read as follows:

    Authority: 5 U.S.C. 5941; E.O. 10000, 3 CFR, 1943-1948 Comp., p. 
792; E.O. 12510, 3 CFR, 1985 Comp., p. 338.

    2. In Sec. 591.205, the second sentence in paragraph (b)(3) is 
revised to read as follows:


Sec. 591.205  Comparative cost index.

* * * * *
    (b) * * *
    (3) * * * Standard shelter specifications (e.g., type, size, age) 
are selected for each income level. * * *
* * * * *


Sec. 591.210  [Amended]

    3. In Sec. 591.210, paragraph (d) is removed and paragraphs (e), 
(f), and (g) are redesignated as paragraphs (d), (e), and (f), 
respectively.

[FR Doc. 95-22316 Filed 9-7-95; 8:45 am]
BILLING CODE 6325-01-M