[Federal Register Volume 61, Number 226 (Thursday, November 21, 1996)]
[Rules and Regulations]
[Pages 59173-59178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29773]



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  Federal Register / Vol. 61, No. 226 / Thursday, November 21, 1996 / 
Rules and Regulations  

[[Page 59173]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 591

RIN 3206-AH56


Cost-of-Living Allowances (Nonforeign Areas); Partnership Pilot 
Project

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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

SUMMARY: The Office of Personnel Management (OPM) is issuing 
regulations to establish a pilot project in which OPM will form 
partnerships with agencies and employees in administering the 
nonforeign area cost-of-living allowance (COLA) program. Under the 
project, COLA partnership committees will be established in Alaska, 
Hawaii, Puerto Rico, Guam, and the U.S. Virgin Islands, and possibly in 
the Washington, DC, area, to assist OPM in designing, conducting, and 
reviewing the results of COLA surveys as well as in reviewing and 
improving the COLA program. Involvement in the committees should help 
OPM, affected agencies, and their employees better understand issues 
relating to the compensation of Federal employees in these areas. The 
regulations also make a technical amendment to clarify the term 
``agency'' as it applies to the COLA program.

EFFECTIVE DATE: These regulations become effective on November 21, 
1996.

FOR FURTHER INFORMATION CONTACT: Donald L. Paquin, (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 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 August 12, 1996 (61 FR 41746), to 
initiate a COLA Partnership Pilot Project that would provide for 
greater agency and employee involvement in the COLA program through the 
use of COLA partnership committees composed of representatives of OPM, 
other agencies, and labor organizations in Alaska, Hawaii, Puerto Rico, 
Guam, and the U.S. Virgin Islands. OPM proposed that committees advise 
and assist OPM in planning COLA surveys, observe data collection during 
the surveys advise and assist OPM in the review of survey data, advise 
OPM on the COLA program and other compensation issues relating to the 
allowance areas, and assist OPM in dissemination of information to 
affected employees about the COLA surveys and the COLA program. In 
addition, OPM proposed a technical amendment to define ``agency'' under 
the definitions section of 5 CFR part 591, subpart B, and to remove a 
corresponding reference in Sec. 591.203 to agencies covered by the 
subpart.
    Earlier this year, OPM briefed agency and employee representatives 
in the Washington, DC, area and Anchorage, Honolulu, San Juan, Guam, 
and the U.S. Virgin Islands on the proposed pilot project. During and 
subsequent to these briefings, OPM received several comments on the 
project, and we took these into consideration in drafting the proposed 
regulations. In response to the publication of the proposed 
regulations, we received additional comments. Most of the comments OPM 
received endorsed the major elements of the proposed pilot project 
while making suggestions for change or identifying issues that need 
clarification. Four commenters objected to the pilot project overall. 
In the discussion that follows, we address all comments received.

Agency and Employee Representation on Partnership Committees

    Two commenters suggested that one of the members of the committee 
represent the Federal Executives Association (FEA) or Federal Executive 
Board (FEB) in each area that has an FEA or FEB. Two other commenters 
made similar suggestions concerning the COLA Defense Committees, and a 
third commenter believed OPM should include a representative from the 
Federal Managers Association (FMA). Other commenters expressed concerns 
that their agency or union would not be represented on the committees. 
One commenter suggested that all Federal labor unions be allowed to 
have a representative on the COLA partnership committees. These 
comments echoed several that OPM heard earlier this year when it 
briefed agency and employee representatives.
    OPM tried to find a balance between effective representation and 
effective committee operation. The pilot project regulations provide 
for committees with five agency representatives, five employee 
representatives, and one or more OPM representatives, plus additional 
members as recommended by the committee and approved by OPM. These are 
large committees, and we are concerned that if they become much larger 
they will not function effectively. Therefore, OPM is not expanding the 
size of the basic committee.
    To accommodate the FEA/FEB suggestion without expanding the 
committee, we modified the regulations so that FEA/FEBs will be offered 
the agency rotational position in areas where there is an FEA or FEB. 
In areas where there is no FEA or FEB or if the FEA or FEB declines,we 
will use the process originally proposed--i.e., sampling with 
probability proportional to the size of the agency.
    Although OPM wants to prevent the committees from becoming so large 
that they will be unwieldy, OPM notes that the regulations allow each 
partnership committee to recommend additional members to OPM, including 
persons representing the FMA, COLA Defense Committees, and other 
organizations. OPM will try to accommodate such requests if it appears 
practical to do so.
    In addition, OPM will make the meetings open to the public and 
establish systems of communication (e.g., via mail, telephone, 
facsimile, computer bulletin boards, and/or Internet) so that agencies 
and employee groups can attend these meetings, hear the discussions, 
and make their views known. We will also use the same systems of 
communication so that those not directly on the committee or in 
attendance at the meetings can have access to the information provided 
and the issues under discussion.

[[Page 59174]]

    One commenter suggested that OPM choose all agency representatives 
at random and rotate the committee positions among agencies on a 6-
month basis. The commenter noted that this could be cumbersome, since 
new members would be joining the committee every 6 months. OPM agrees 
that this procedure would be combersome and that it would not ensure 
that the views and interests of the major Federal employers in each 
area are represented on the committee. Therefore, OPM is not adopting 
this approach.
    Another commenter recommended that OPM not use OPM staff from 
outside the allowance area. The commenter believed OPM's own 
representatives within the allowance areas could serve on the committee 
or as data collectors if their work and activities were reviewed 
properly. Under 5 CFR part 2635, Federal employees must avoid engaging 
in activities where there is the appearance of a conflict of interest. 
Thus, we believe it is preferable to use OPM staff from outside the 
allowance area for the pilot project.

Identifying Largest Federal Unions and Employers by Area

    Two commenters stated that OPM did not have correct information 
regarding the number of employees in bargaining units in each area. OPM 
received similar comments earlier when it briefed agency and employee 
representatives on the proposal. For these briefings, OPM used 
materials that showed the number of employees by bargaining unit as 
reported in the Central Personnel Data File (CPDF)--a census of 
Government workers reported to OPM by Federal agencies. The CPDF is the 
best source of Governmentwide information on the number of employees in 
bargaining units; however, OPM will attempt to supplement CPDF data 
with other information provided by agencies and/or unions if the counts 
by agency/union are such that relatively small changes could make a 
difference in the composition of a committee.
    Another commenter believed OPM had classified the Puerto Rico 
Federal Executives Association as an employee organization because, in 
its briefing materials, OPM had listed ``FEA'' among the major labor 
organizations in Puerto Rico. The ``FEA'' listed in the briefing 
materials refers to the Federal Educators Association, a major labor 
organization in Puerto Rico. OPM recognizes that Federal Executives 
Associations are not labor organizations, although we also agree with 
the commenter that Federal Executives Associations are concerned with 
the interests of both the agencies and the employees.
    A third commenter expressed concern that the civilian agencies 
would be under-represented on the partnership committees because the 
military departments (e.g., Army, Navy, and Air Force) would have three 
of the five seats in most areas. Although it was suggested during our 
earlier briefings that OPM consider the military departments as 
separate agencies for the purpose of committee membership, the proposed 
and final regulations use the term ``Executive agency,'' as defined in 
5 U.S.C. 105. Under section 105, the Department of Defense (DOD) is 
defined as an Executive agency and is considered to be a single agency. 
Therefore, DOD will have no more than one agency representative on any 
COLA partnership committee.

Release of Employee Representatives

    Two commenters objected to and one commenter expressed serious 
concerns about the way employee representatives were to be selected for 
the committees. Under the proposed regulations, agencies would select 
agency committee representatives, but employee organizations would 
nominate representatives and OPM would select committee representatives 
from among the nominations in consultation with the employing agencies. 
The commenters noted that it is very important for employees to have as 
their representatives persons of their own choosing. OPM agrees, but it 
cannot require agencies to release specific employees for committee 
duties if the employees' work at their jobs is critical to the mission 
of the agency. One commenter suggested that OPM adopt language similar 
to that used in section 532.229(b)(6) of title 5, Code of Federal 
Regulations, which addresses the release of employee representatives 
for work on Federal Wage System surveys. These regulations state in 
part that ``[e]mployers shall cooperate and release appointed employees 
for committee proceedings unless the employers can demonstrate that 
exceptional circumstances directly related to the accomplishment of the 
work units' missions require their presence on their regular jobs.'' 
OPM agrees that such a provision is appropriate and has included 
parallel language in the final pilot project regulations.
    Another commenter stated that OPM failed to recognize Federal union 
representatives as full-time Federal employees while these employees 
are in a leave without pay status from their Federal jobs. The 
commenter said that by creating its own criteria, OPM was prohibiting 
certain Federal union representatives from being on the COLA 
partnership committees.
    The regulatory requirement that all members of the COLA partnership 
committees be Federal employees stems from the requirements of the 
Federal Advisory Committee Act (FACA) (Public Law 92-463) and Executive 
Order 12838. FACA applies to committees established by the Federal 
Government that have as their membership one or more persons who are 
not full-time Federal employees. Executive Order 12838 prohibits 
agencies from establishing committees subject to FACA unless required 
by law or ``compelled by considerations of national security, health or 
safety, or similar national interests.'' Therefore, OPM cannot 
establish COLA partnership committees if they would be subject to FACA. 
Since FACA does not apply to committees composed solely of full-time 
Federal employees, OPM's final regulations require that all COLA 
partnership committee members be full-time Federal employees. A person 
who is on leave without pay is not considered a full-time Government 
employee during that period of time for the purpose of applying FACA 
and will not be able to serve on a COLA partnership committee while in 
a nonpay status.

U.S. Postal Service and Its Employee Representatives

    In its comments, the U.S. Postal Service (USPS) stated that its 
collective bargaining agreements did not allow it to pay USPS union 
members for work performed on the partnership committees. USPS said, 
however, that it could grant union representatives leave without pay 
for committee work. As discussed above, COLA partnership committee 
members must be full-time Federal employees in the pay of the Federal 
Government during the time they are performing committee work. 
Therefore, unless USPS agrees to pay its union representatives for 
partnership committee work, the union representatives will not be 
eligible to serve on the committees because (as explained above) they 
would not be full-time Federal employees during such periods of work 
for the purpose of applying FACA. Since it would not be equitable to 
have USPS represented on the committee but not its employees, OPM has 
modified its regulations to make USPS participation in the pilot 
project conditional upon the involvement of both USPS and its unions.

[[Page 59175]]

Experience and Training

    Several commenters noted the importance of having committee 
representatives and data collection observers with technical experience 
concerning COLA issues, and two commenters suggested that OPM select 
committee members and observers based on the nominees' qualifications. 
Although technical experience certainly could be an asset, we believe 
committee members and observers with broad ranges of experience can 
provide valuable insights and advice concerning COLA's, compensation, 
and recruitment and retention issues. Also, as noted above, we believe 
agencies and employees should be represented by persons of their own 
choosing, rather than by others selected through some other means. 
Therefore, we do not plan to adopt these suggestions.
    Nevertheless, OPM agrees that training, experience, and support are 
important for effective committee participation, and we will work with 
the committees to provide the resources and information necessary. We 
note, however, that while some aspects of the COLA methodology are 
complex, the fundamental principles involved in survey design and 
execution (e.g., item and outlet selection and data collection) are 
based on common consumer behavior--experiences that we all have. 
Therefore, we believe the committee members and observers will be able 
to make valuable contributions toward improving the surveys while they 
acquire more technical expertise and background in the COLA program.
    One commenter stated that unless all participants in the COLA 
partnership process had jointly received employee involvement training, 
the partnership committees could become dysfunctional. The commenter 
recommended that such training be provided in advance of the first 
committee meetings. OPM believes many of the representatives who will 
serve on the COLA partnership committees will have had employee 
involvement training, and timing and budget considerations make it 
difficult to provide such training in advance of the initial meetings. 
If the lack of employee involvement training threatens to undermine the 
pilot project, OPM will revisit this issue and determine how such 
training might be provided.

Data Collection Observers

    One commenter questioned whether the proposed role of the data 
collection observer was an efficient use of manpower resources. The 
commenter suggested expanding the role to include actual data 
collection or dropping the role entirely. OPM believes the role of the 
data collection observer is important because it will provide integrity 
to the data collection effort. This integrity cannot be achieved if 
either OPM or the COLA recipients were to collect the data alone. 
Furthermore, we do not expect the observer to stand by silently and 
offer no comments or suggestions during the surveys. We expect that 
observers will provide valuable insights both during and after the data 
collection process and that these insights will be very useful as the 
COLA partnership committees work to improve surveys from one year to 
the next.

COLA Committee in the DC Area

    Two commenters suggested that OPM involve agency and employee 
representatives from the Washington, DC, area in the pilot project. OPM 
agrees that the integrity of the program could benefit from such 
involvement in the DC area survey, and we have modified the regulations 
to allow this. OPM will explore the issue further with agency and 
employee representatives in the DC area and will establish a DC area 
committee if it appears practical to do so.

Subcommittees

    One commenter stated that subcommittees in the allowance areas in 
Alaska should be required by regulation rather than simply permitted at 
the discretion of OPM and the COLA partnership committees. We agree 
that subcommittees will be valuable assets to the partnership 
committees and to OPM in the conduct of the survey. Therefore, we 
certainly will encourage the committees to establish a subcommittee in 
each of the COLA survey areas. Although OPM could make these 
subcommittees mandatory, we did not adopt this change because we do not 
think it will be necessary. We also note that under the regulations OPM 
can establish additional partnership committees if necessary.
    During our briefings of agency and employee representatives, it was 
suggested that OPM establish two types of COLA committees--a COLA 
policy committee and a COLA survey subcommittee. OPM agrees that it may 
well be valuable to have subcommittees that focus on specific issues, 
processes, and/or geographic interests, and the regulations allow for 
this at the recommendation of the COLA partnership committees as 
approved by OPM. We anticipate that subcommittees will be established 
for various purposes during the pilot project.

Review of Pilot Project

    One commenter suggested that the pilot project be reviewed 
periodically to determine whether it represents an efficient use of 
resources, and another commenter asked how the effectiveness of the 
pilot project would be measured. OPM agrees that the effectiveness of 
the pilot project should be evaluated during and at the end of project. 
Certainly, if it becomes clear that the pilot project is not effective, 
OPM will discontinue it. However, based on the majority of the comments 
we have received to date, we believe this is an unlikely prospect.

Expenses Related to Committee Activities

    One commenter noted that the commentary that preceded the proposed 
regulations suggested that agency committee representatives would have 
their travel costs paid by the Government, but that employee 
representatives would not. That is not what we intended. To clarify 
this, we have revised the regulations to state clearly that employees 
serving as committee or subcommittee members are considered to be on 
official assignment to an interagency function. Therefore, such 
employees, without regard to whether they are agency or employee 
representatives, will be entitled to reimbursement for travel expenses 
related to COLA partnership committee work. However, as we noted in the 
commentary on the proposed rule, we expect such expenses to be minimal 
because all non-OPM committee and subcommittee members will be 
residents of the immediate area, and non-local travel will therefore be 
unnecessary in most cases.
    Another commenter believed OPM should provide the budgetary 
resources necessary for COLA partnership and not rely on agency 
support. In developing this pilot project, OPM tried to minimize its 
budget impact. We also consulted with the major Federal employers in 
the allowance areas and discussed the potential impact with them. 
Although they recognized that the pilot project would be a new resource 
requirement, most of the agencies found merit in the proposal and 
agreed to support the project in terms of the staff time and related 
expenses associated with the program.

Committee Charters

    One commenter asked whether COLA partnership committees would be 
chartered. Although charters are not required for these committees, OPM 
believes that charters would be beneficial and plans to encourage

[[Page 59176]]

committees to develop charters. These charters could provide additional 
detail on and clarify committee objectives and scope, membership 
requirements, agency support, reports, OPM and other agency support, 
etc.

Issues Relating to COLA Surveys

    One commenter believed prices in Puerto Rico were higher in the 
fall than in the January through March time frame during which OPM will 
conduct the COLA surveys. The commenter recommended changing the timing 
of the survey or using a factor to adjust for any price differences. On 
May 11, 1995, OPM published in the Federal Register (60 FR 25150) for 
comment a notice that said it planned to change the timing of the 
surveys of Hawaii, Guam, Puerto Rico, and the U.S. Virgin Islands to 
the first quarter of the calendar year. OPM received no comments 
opposing that change. Nevertheless, timing of the COLA surveys is one 
of the issues that COLA partnership committees could consider as they 
advise OPM on the COLA program.
    One commenter suggested that OPM take into consideration other 
measures of relative living costs, such as those reported by certain 
private sector companies, and another commenter suggested that OPM 
consider varying COLA rates by income level. OPM believes these are 
valuable suggestions and are certainly topics that the COLA partnership 
committees could consider.

Opposition to Proposed Pilot Project

    Four commenters objected to the proposed pilot project overall. 
Their comments and our analyses and responses are noted below.
    Procedure for selecting employee representatives: As noted earlier, 
two commenters objected to the procedure for selecting employee 
representatives for the committees. In response to these concerns, OPM 
modified the regulations to ensure that employee organizations are 
represented by persons of their own choosing, except when the affected 
work unit's mission requires the employee's presence on his or her 
regular job.
    One commenter criticized the proposal because it involved agencies 
in a technical process that could affect their budgets. The commenter 
said that the agencies' right to select their representatives and 
consult with OPM concerning the selection of employee representatives 
gives the agencies the ability to improperly influence the survey 
results. The COLA program was established to provide a compensation 
tool that helps agencies recruit and retain a well-qualified work 
force. Therefore, we believe agencies must be involved in any effort to 
improve the administration of the COLA program. Furthermore, as 
discussed earlier, OPM has modified its regulations to address issues 
relating to the selection of employee representatives. We believe this 
change will strengthen the composition of the committee and guarantee 
the free exchange of ideas and issues from all perspectives.
    Another commenter believed the process of selecting only the 
largest unions in terms of the number of COLA recipients they represent 
would promote conflict and competition among labor organizations. OPM's 
experience working with labor organizations under the Federal Wage 
System for over 20 years has shown that Federal labor organizations 
work cooperatively in these situations. Therefore, we do not believe 
the COLA partnership process will be jeopardized by union conflict and 
competition.
    Nature of the partnership committees: Two commenters believed the 
committees should not be called ``partnerships'' because the committees 
would be advisory in nature. One commenter was concerned that the 
committees might be expected to ``rubber stamp'' OPM's unilateral 
actions, and that if this were to happen, participating organizations 
might be ``tainted.'' Another commenter believed committee members 
would be ``turned off'' if they did not have the ability to influence 
decisions that affect them.
    No two partnerships look exactly alike, and OPM believes that 
establishment of these committees will result in a more collaborative 
relationship among affected agencies and employees with respect to this 
complex and often contentious program. By statute and Executive order, 
however, OPM has the final authority for conducting COLA surveys and 
administering the COLA program. If a consensus cannot be reached on an 
issue or if the views of one COLA committee differ from those of 
another on the same issue, OPM must still conduct surveys and set COLA 
rates. Nevertheless, this does not mean that we cannot use partnership 
to improve the COLA program.
    OPM plans to accommodate suggestions whenever practical and 
consistent with the laws and regulations that govern the COLA program. 
We certainly do not expect the committees to ``rubber stamp'' our 
proposals. Instead, we plan to listen carefully to and seriously 
consider all of the information and advice that will be provided. We 
know there is much we can learn that will help us improve the surveys 
and the way we administer the program, and we look forward to having 
frank and open discussions with the other committee members. It is our 
hope that we can reach a consensus on the vast majority of issues that 
will face us. As several commenters said, the partnership process will 
not work unless there is a sincere commitment from all parties, 
including OPM, to share ideas, listen to others, learn from what is 
said, and find areas of agreement. OPM is committed to this process.
    Agency impact: Another commenter objected to the proposal on the 
basis that it seemed to set up a new bureaucracy to deal with COLA 
issues and that this was not an efficient use of resources in a time of 
downsizing. The commenter appeared to suggest that OPM consider using a 
different approach to compensation, such as the locality pay provisions 
of the Federal Employees Pay Comparability Act of 1990 (Public law 101-
509). OPM recognizes that the pilot project will require staff time of 
a limited number of agencies and employee representatives in each area 
and that this comes at a time when many agencies have had staff-level 
reductions. Therefore, in developing the pilot project, OPM strived to 
limit the number and size of the committees while trying to ensure that 
there is adequate representation and a sufficient number of people to 
do the work. We do not believe we are creating a bureaucracy, but 
rather furthering National Performance Review objectives concerning 
management and employee partnership.
    Memorandum of understanding and COLA partnership: Two commenters 
objected to the proposal because of perceived conflicts between COLA 
partnership work and the work to be performed under a memorandum of 
understanding (MOU) between the Government and the plaintiffs in Alaniz 
v. Office of Personnel Management and Karamatsu v. United States. The 
commenter felt that the pilot project would undermine the MOU and 
dilute the parties' resources to work on it. One commenter suggested 
that the pilot project be postponed and reconsidered at the end of the 
``Safe Harbor'' process envisioned by the MOU. The same commenter also 
suggested that OPM delete or amend several of the functions of COLA 
partnership committees, as described in Sec. 591.212(d) of the proposed 
regulations. The other commenter believed the pilot project duplicated 
and conflicted with the Safe Harbor process.
    While we agree that both the MOU and the COLA partnership ;pilot 
project are major undertakings, we do not

[[Page 59177]]

believe they will deplete the resources necessary to participate 
effectively in both processes. Furthermore, we see the MOU and pilot 
project as two distinctly different processes that, while having 
similar overall goals, will not conflict with one another. The MOU is 
designed to engage the parties in Alaniz and Karamatsu in a 
collaborative process through which the parties will attempt to reach 
agreement on issues that have long been contested in the COLA program 
and to help OPM in connection with its report to Congress, which is 
required by Public Law 102-141, as amended. The COLA pilot project is 
designed to use partnerships of agency and employee representatives to 
assist OPM in designing, conducting, and reviewing results of annual 
COLA surveys; to improve the COLA program and OPM's administration of 
the program; and to explore issues relating to the compensation of 
Federal employees in the allowance areas. As with the MOU, the 
information and experience that OPM will gain through the pilot project 
will also be helpful in preparing our report to Congress. OPM believes 
the MOU and COLA partnership will complement each other as they provide 
information on different aspects of the COLA program. This information 
will be very beneficial to Congress as it reviews and considers the 
COLA program. Therefore, we believe it would be undesirable to postpone 
the pilot project until the MOU process is complete or to modify the 
functions of the COLA partnership committees.
    Training, expertise, and resources: One of the commenters also 
believed the partnership committees would have insufficient resources, 
experience, and training to participate effectively. The commenter felt 
that the COLA Defense Committees would be able to participate more 
effectively and criticized OPM for not explicitly including 
representatives from the COLA Defense Committees on the COLA 
partnership committees.
    As discussed above, the regulations allow for the COLA partnership 
committees to expand their membership in consultation with OPM, and OPM 
intends to be open to such requests. Therefore, if any COLA partnership 
committee believes it would be appropriate to include representatives 
from a COLA Defense Committee, OPM will try to support such a request, 
provided that the size of the committee does not threaten its 
effectiveness.
    As also discussed above, OPM agrees that training, experience, and 
support are important, and we plan to provide the resources and 
information necessary for effective involvement. Although there may be 
individuals in each area who have more experience with COLA issues, we 
believe there is much to be gained from the involvement of a wide range 
of views and interests, and we also believe effective experience 
concerning COLA issues can be gained quickly through participation in 
the COLA partnership pilot project.

Waiver of 30-Day Delay in Effective Date

    Pursuant to section 553(d)(3) of title 5, United States Code, OPM 
finds that good cause exists to make these regulations effective in 
less than 30 days. The regulations are being made effective immediately 
in order to provide sufficient time for the COLA partnership committees 
to organize and prepare for the surveys to be conducted during the 
first quarter of calendar year 1997.

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.

U.S. Office of Personnel Management
James B. King,
Director.

    Accordingly, OPM amends 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. Section 591.201 is amended by adding a definition of ``agency'' 
in alphabetical order to read as follows:


Sec. 591.201  Definitions.

* * * * *
    Agency means an Executive agency as defined in section 105 of title 
5, United States Code, but does not include Government-controlled 
corporations. For the purposes of Sec. 591.212, ``agency'' also 
includes the United States Postal Service.
* * * * *
    3. Section 591.203 is amended by revising the section heading and 
the introductory text to paragraph (a) to read as follows:


Sec. 591.203  Employees covered.

    (a) This subpart applies to civilian employees whose rates of basic 
pay are fixed by statute and who are employed by an agency. The 
following pay plans are covered by this subpart:
* * * * *
    4. Section 591.212 is added to read as follows:


Sec. 591.212  COLA Partnership Pilot Project.

    (a) Purpose and duration of COLA Partnership Pilot Project. The 
COLA Partnership Pilot Project is designed to assess the efficacy of a 
plan to increase agency and employee involvement in the allowance 
program. The pilot project shall be in effect for a period not to 
exceed 2 years from November 21, 1996.
    (b) Purpose and establishment of committees. To assist OPM in 
reviewing and improving the allowance program and to help OPM, affected 
agencies, and their employees better understand issues relating to the 
compensation of Federal employees in the allowance areas, OPM may 
establish one or more COLA partnership committees in the allowance 
areas and in the Washington, DC, area. Committees established under 
this section function at the discretion of OPM and may be 
disestablished at any time. A committee may represent agencies and 
employees in more than one allowance area and will meet from time to 
time as requested by OPM.
    (c) Composition of committees. Each committee shall be composed of 
one or more representatives of Federal agencies and labor 
organizations. All committee members shall be current full-time Federal 
employees performing official business of the Federal Government and 
will serve at their agencies' and OPM's discretion. All non-OPM 
committee members shall be from the area represented by the committee. 
The representatives shall be selected as follows:
    (1) Agency representatives. (i) OPM will identify the largest 
agencies (in terms of allowance recipients) in the area represented by 
the committee. For the Washington, DC, area committee, if established, 
OPM will identify the largest agencies in terms of allowance recipients 
in all of the allowance areas. OPM will invite up to four agencies each 
to designate a representative to serve on the committee. In areas where 
a Federal Executive Association (FEA) or Federal Executive Board (FEB) 
is located, OPM will invite the FEA or FEB to nominate an FEA or FEB 
member employed by an agency not otherwise represented on the 
committee, and OPM will select the nominee in consultation with the 
nominee's employing agency.

[[Page 59178]]

In areas where there is no FEA or FEB, or where an FEA or EB declines 
to participate, OPM will invite one additional agency selected from 
among the other agencies in each committee area to designate a 
representative to serve on the committee on a 1-year rotational basis. 
To select this agency, OPM will use sampling with probability 
proportional to the size of the agency. If mutually agreeable among the 
agencies, they may select representatives using other means and may 
rotate committee positions among agencies on other than a 1-year 
rotational basis.
    (ii) OPM will appoint one or more of its employees to serve on each 
COLA partnership committee.
    (2) Employee representatives. OPM will identify the largest labor 
organizations (in terms of allowance recipients) in the area 
represented by the committee. For the Washington, DC, area committee, 
if established, OPM will identify the largest labor organizations in 
terms of allowance recipients in all of the allowance areas. OPM will 
invite up to four labor organizations each to nominate a representative 
to serve on the committee. OPM will further invite one additional labor 
organization selected from among the other labor organizations in each 
committee area to nominate a representative to serve on the committee 
on a 1-year rotational basis. To select this labor organization, OPM 
will use sampling with probability proportional to the size of the 
labor organization. If mutually agreeable among the labor 
organizations, they may nominate representatives using other means and 
may rotate committee positions among labor organizations on other than 
a 1-year rotational basis. OPM will select committee members from among 
the nominees in consulation with the nominees' employing agencies.
    (3) Postal Service. No committee shall have a representative from 
the United States Postal Service (USPS) unless USPS labor organizations 
have the opportunity to participate as provided by paragraph (g) of 
this section. No committee shall have more than one employee 
representative from USPS labor organizations.
    (4) Other members. In consultation with the committee members, OPM 
may invite other current full-time Federal employees to serve on the 
committees. OPM will coordinate such invitations with the employing 
agencies.
    (d) Functions of committees. COLA partnership committees may--
    (1) Advise and assist OPM in planning living-cost surveys;
    (2) Provide or arrange for observers for data collection during 
living-cost surveys;
    (3) Advise and assist OPM in the review of survey data;
    (4) Advise OPM on its administration of the COLA program, including 
survey methodology and other issues relating to the compensation of 
Federal employees in the allowance areas; and
    (5) Assist OPM in the dissemination of information to affected 
employees about the living-cost surveys and the COLA program.
    (e) Data collection observers. In consultation with the committees, 
OPM will determine the number of observers required to accompany OPM 
officials during the collection of living-cost data. All observers 
shall be from the local area and shall be full-time Federal employees 
performing official business of the Federal Government. The committees 
will nominate observers, and OPM will select from among these 
nominations in consultation with the nominees' employing agencies.
    (f) Subcommittees. In consultation with the committees, OPM may 
establish one or more subcommittees to advise the committee on issues 
relating to the allowance areas and survey areas within the geographic 
area represented by the committee. If such subcommittees are 
established, they shall be composed of up to two agency representatives 
and two employee representatives from the local area, as well as one or 
more OPM representatives. OPM may, in consultation with the committee 
and subcommittee, invite additional Federal employees to serve on the 
subcommittee. Subcommittee agency and employee representatives shall be 
nominated and appointed in the same manner as committee members. All 
subcommittee members shall be current full-time Federal employees 
performing official business of the Federal Government.
    (g) Agency release of employees for committee/subcommittee 
activities. Employers shall cooperate and release nominated employees 
for committee/subcommittee proceedings and activities unless the 
employers can demonstrate that exceptional circumstances directly 
related to the accomplishment of the work units' missions require their 
presence on their regular jobs. Employees serving as committee or 
subcommittee members are considered to be on official assignment to an 
interagency function, rather than on leave.

[FR Doc. 96-29773 Filed 11-20-96; 8:45 am]
BILLING CODE 6325-01-M