[Federal Register Volume 66, Number 218 (Friday, November 9, 2001)]
[Proposed Rules]
[Pages 56741-56750]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-28058]



  Federal Register / Vol. 66, No. 218 / Friday, November 9, 2001 / 
Proposed Rules  

[[Page 56741]]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 591

RIN 3206-AJ41


Cost-of-Living Allowances (Nonforeign Areas); Methodology Changes

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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SUMMARY: The Office of Personnel Management (OPM) is proposing wide-
ranging changes in the methodology used to determine nonforeign area 
cost-of-living allowances (COLAs). OPM is proposing these changes 
pursuant to the settlement of litigation regarding the COLA program. 
For clarity and ease of use, OPM has written the proposed regulations 
in a question-and-answer format.

DATES: Comment date: Submit comments on or before January 8, 2002.

ADDRESSES: Send or deliver written comments to Donald J. Winstead, 
Assistant Director for Compensation Administration, Workforce 
Compensation and Performance Service, Office of Personnel Management, 
Room 7H31, 1900 E Street NW., Washington, DC 20415-8200; fax: (202) 
606-4264; or e-mail: [email protected].

FOR FURTHER INFORMATION CONTACT: Donald L. Paquin, (202) 606-2838; fax: 
(202) 606-4264; or e-mail: [email protected].

SUPPLEMENTARY INFORMATION: Section 5941 of title 5, United States Code, 
authorizes the payment of cost-of-living allowances (COLAs) to 
employees of the Federal Government stationed in certain nonforeign 
areas outside the contiguous 48 States whose rates of basic pay are 
fixed by statute. Executive Order 10000, as amended, delegates to OPM 
the authority to administer nonforeign area COLAs and prescribes 
certain operational features of the program.
    The Government pays nonforeign area COLAs to General Schedule, U.S. 
Postal Service, and certain other Federal employees in Alaska, Hawaii, 
Guam and the Commonwealth of the Northern Mariana Islands (CNMI), 
Puerto Rico, and the U.S. Virgin Islands. The Office of Personnel 
Management (OPM) conducts living-cost surveys in each allowance area to 
determine whether, and to what degree, local living costs are higher 
than those in the Washington, DC area. OPM sets the COLA rate for each 
area based on the results of these surveys. The current COLA rates were 
set pursuant to the settlement of Caraballo, et al. v. United States, 
No. 1997-0027 (D.V.I), August 17, 2000, and became effective in October 
2000.

Settlement Agreement

    Caraballo was a class-action lawsuit in which the plaintiffs 
contested the methodology OPM used to determine COLA rates. In the 
Caraballo settlement, the plaintiffs agreed that if the Government 
adopted and maintained certain changes in the COLA program, the 
plaintiffs would be forever barred from bringing suit over these 
issues. Exhibit A of the settlement agreement enumerates 26 ``Safe 
Harbor Principles'' that outline the changes to which the parties 
agreed. (The settlement agreement is available on OPM's website at 
www.opm.gov/oca/cola.) To implement these changes, amendments to 
Executive Order 10000 and OPM's regulations were and are necessary.

E.O. 10000 Amendments

    On April 5, 2001, the President signed E.O. 13207 (published on 
April 9, 2001, at 66 FR 18399) to amend E.O. 10000 to conform to 
several provisions of the Caraballo settlement. The amendments to E.O. 
10000 (1) removed the requirement that OPM establish separate COLA 
rates for employees who have commissary and exchange shopping 
privileges; (2) allowed OPM to conduct COLA surveys less frequently; 
and (3) allowed OPM to reduce COLA rates gradually if warranted by the 
implementation of the methodology. OPM is publishing an interim rule 
elsewhere in this issue of the Federal Register to make corresponding 
changes in the nonforeign area COLA regulations.

OPM Regulation Changes

    The parties agreed to modify significantly the current COLA 
methodology. Because of the extent of these changes, it is necessary to 
rewrite completely the COLA regulations. This also gives us the 
opportunity to improve the clarity of the regulations by adopting a 
question-and-answer format. In addition, although the post differential 
portion of the regulations was not affected by the settlement, we are 
revising the post differential provisions in subpart B of part 591, 
title 5, Code of Federal Regulations, as well.
    OPM consulted with representatives of the Caraballo plaintiffs 
throughout the development of these proposed regulations. We have set 
out the full text of the proposed regulations at the end of this 
document for review and comment. The following summary briefly 
describes the new methodology as set out in the settlement agreement:
    COLA Surveys. OPM sets COLA rates based on relative differences in 
prices plus an adjustment factor. OPM determines relative differences 
in prices by surveying the prices of goods and services in the 
categories of food, shelter and utilities, household furnishings and 
supplies, clothing, transportation, medical, recreation and education, 
and miscellaneous. To the extent practical, OPM surveys the prices of 
the same brands, models, sizes, and types of items in the same kinds of 
outlets in the COLA areas and in the Washington, DC, area. OPM surveys 
the final price charged to the consumer in effect at the time of the 
survey. Thus, OPM surveys both sale prices (if the item is on sale at 
the time of the survey) and regular prices, plus any sales or excise 
tax and shipping and handling charges (if applicable) that are added to 
the price.
    Survey Timing. Except for the ``Rest of the State of Alaska'' COLA 
area, OPM conducts the surveys in the COLA areas on a rotational basis 
once every 3 years and in the Washington, DC, area, which is the 
reference area, once every year. OPM plans to conduct the first COLA 
surveys under the new methodology in Puerto Rico, the U.S. Virgin 
Islands, and the Washington, DC, area in the summer of 2002. In the 
late spring of 2003, OPM plans to conduct surveys in Alaska and the DC 
area, and in the spring of 2004, OPM plans to conduct surveys in 
Hawaii, Guam, and the Washington, DC area. Thereafter, OPM plans to 
conduct COLA surveys following the same rotation in the spring of each 
year.
    Rest of the State of Alaska. Instead of conducting surveys in the 
``Rest of the State of Alaska'' allowance area, OPM uses one or more 
alternative sources of living-cost information, such as that published 
by the University of Alaska, Alaska Cooperative Extension. These data 
show prices for various locations in the Rest of the State of Alaska 
COLA area relative to Anchorage, AK. OPM uses these data along with the 
Anchorage COLA price index to compute a price index for the Rest of the 
State of Alaska allowance area. If, however, the use of such an 
alternative otherwise would result in a COLA rate reduction, OPM will 
first conduct an onsite survey in one or more locations in the Rest of 
the State of Alaska allowance area and publish the results before 
making any COLA rate reduction, if warranted.
    Computing Shelter Costs. To compute relative shelter costs, OPM 
surveys the prices of rental units and, to the extent practical, the 
``rental equivalence'' of owner-occupied units in the COLA areas and 
the Washington, DC, area. ``Rental equivalence'' is what an owner-

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occupied dwelling would rent for if it were available for rent, and the 
approach OPM uses is similar to the one the Bureau of Labor Statistics 
uses to calculate the Consumer Price Index (CPI).
    In addition to collecting the rental rate or the rental estimate, 
OPM also collects information about the characteristics of the 
dwelling, e.g., room count, size, location, and other qualitative 
factors about the home. OPM uses this information along with a form of 
multiple regression called ``hedonic regression'' to control for 
differences in quality of the dwellings across areas and allow the 
comparison of shelter costs of equivalent qualities of shelter. OPM 
compares these costs to derive a shelter index that is used in the same 
manner as other price indexes in the COLA methodology.
    Utility Function. OPM uses a model to compute the energy 
requirements for a standard home in each area. The standard home is 
equivalent in size and other key characteristics between the COLA area 
and the Washington, DC, area, but is constructed according to the 
current building codes in each area. OPM combines the energy 
requirements by type (i.e., oil, gas, and electricity) with the price 
of the energy type to derive an annual utility cost for each area. OPM 
compares these costs to derive a utility index that is used in the same 
manner as other price indexes in the COLA methodology.
    Consumer Expenditure Weights. For each item priced in both the COLA 
area and the Washington, DC, area, OPM computes a price index. We 
combine these price indexes into an overall price index by using 
expenditure weights derived from the Bureau of Labor Statistics 
Consumer Expenditure Survey (CES). OPM uses expenditure weights that 
reflect average spending patterns of households in the central income 
groups as reported in tabulated CES data. These expenditure weights, 
which approximate democratic weights, are adjusted to reflect the 
expenditure patterns of consumers in the Washington, DC, area.
    CPI Adjustments. In between the triennial COLA surveys and for each 
area not surveyed during the year, OPM adjusts the price index from the 
preceding survey by the relative change in the CPI for the COLA area 
compared to the relative change in the CPI for the Washington, DC, 
area. OPM uses the change in the Puerto Rico CPI for both Puerto Rico 
and the U.S. Virgin Islands, the change in the Anchorage CPI for all 
Alaska COLA areas, and the change in the Honolulu CPI for all areas in 
Hawaii and for Guam and the CNMI.
    Adjustment Factors. To account for differences in need, 
availability of and access to goods and services, and quality of life 
between the COLA areas and the Washington, DC, area, OPM adds to the 
price index an adjustment factor before computing the final living-cost 
index. The adjustment factors range from 5 to 9 index points, depending 
on the area. These adjustments are being established pursuant to the 
Caraballo settlement and are not subject to change with the results of 
the surveys.
    Setting the Final COLA Rate. OPM computes the COLA rate by 
converting the living-cost index to its percentage equivalent and 
rounding that to the nearest whole percentage amount. This is the new 
COLA rate for the area, unless the new rate would otherwise be more 
than 1 percentage point lower than the existing COLA rate. In that 
case, the new COLA rate is not more than 1 percentage point lower than 
the existing COLA rate.
    Agency and Employee Involvement. To advise OPM in planning, 
conducting, and analyzing the results of the COLA surveys and 
administering the COLA program, OPM establishes a COLA Advisory 
Committee in each survey area. The committees are composed of 
representatives of agencies and employees in the COLA survey areas and 
OPM representatives. Each Executive agency must cooperate and release 
employees for committee activities unless the agency can demonstrate 
that exceptional circumstances require an employee's presence on the 
job. Agencies will reimburse employees for authorized travel expenses. 
OPM anticipates that all travel will be local travel.
    Post Differentials. The Caraballo settlement did not address the 
post differential program. Although OPM has also rewritten the post 
differential regulations in a question-and-answer format, the operation 
of this program is unchanged. However, OPM is proposing to clarify the 
portion of the post differential regulations that addresses prior 
residents of a differential area. The current regulations, if read 
outside the context of E.O. 10000, could lead the reader to conclude 
that, with few exceptions, all prior residents of a post differential 
area were forever ineligible to receive a post differential. E.O. 
10000, however, provides that, in determining eligibility, agencies may 
consider the length of time employees resided outside the differential 
area. In the proposed regulations, we clarify that prior residents of a 
post differential area, who have resided outside the area for an 
appropriate period of time, may be eligible to receive a post 
differential.

Executive Order 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Order 12866.

Regulatory Flexibility Act

    I certify that these regulations would not have a significant 
economic impact on a substantial number of small entities because they 
would 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.
Kay Coles James,
Director.

    Accordingly, the Office of Personnel Management is proposing to 
receive subpart B of 5 CFR Part 91 to read as follows:

PART 591--ALLOWANCES AND DIFFERENTIALS

Subpart B--Cost-of-Living Allowance and Post Differential--Nonforeign 
Areas
Sec.
591.201  Definitions

Cost-of-Living Allowances and Post Differentials

591.202  Why does the Government pay COLAs?
591.203  Why does the Government pay post differentials?
591.204  Who can receive COLAs and post differentials?
591.205  Which areas are nonforeign areas?

Cost-of-Living Allowances

591.206  How does OPM establish COLA areas?
591.207  Which areas are COLA areas?
591.208  How does OPM establish COLA rates?
591.209  What is a price index?
591.210  What are weights?
591.211  What are the categories of consumer expenditures?
591.212  How does OPM select survey items?
591.213  What prices does OPM collect?
591.214  How does OPM collect prices?
591.215  Where does OPM collect prices in the COLA and DC areas?
591.216  In which outlets does OPM collect prices?
591.217   For what purposes might OPM survey COLA recipients and 
other Federal employees?
591.218   How does OPM compute price indexes?
591.219   How does OPM compute shelter price indexes?
591.220   How does OPM calculate energy utility cost indexes?
591.221   How does OPM compute the consumer expenditure weights it 
uses to combine price indexes?

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591.222   How does OPM use the expenditure weights to combine price 
indexes?
591.223  When does OPM conduct COLA surveys?
591.224   How does OPM adjust price indexes between surveys?
591.225  Which CPIs does OPM use?
591.226   How does OPM apply the CPIs?
591.227  What adjustment factors does OPM add to the price indexes?
591.228   How does OPM convert the price index plus adjustment 
factor to a COLA rate?
591.229   How does OPM inform agencies and employees of COLA rate 
changes?

Post Differentials

591.230   When does OPM establish post differential areas?
591.231  Which areas are post differential areas?
591.232   How does OPM establish and review post differentials?
591.233  Who can receive a post differential?
591.234  Under what circumstances may people recruited locally 
receive a post differential?

Program Administration

591.235  When do payments begin?
591.236  When do payments end?
591.237  Under what circumstances may employees on leave or travel 
receive a COLA and/or post differential?
591.238   How do agencies pay COLAs and post differentials?
591.239   How do agencies treat COLAs and post differentials for the 
purpose of overtime pay and other entitlements?
591.240   How are agency and employee representatives involved in 
the administration of the COLA and post differential programs?
591.241  What are the key activities of the COLA Advisory 
Committees?
591.242  What is the tenure of a COLA Advisory Committee?
591.243   How many members are on each COLA Advisory Committee?
591.244   How does OPM select COLA Advisory Committee members?
Appendix A of Subpart B--Places and Rates at Which Allowances Are 
Paid
Appendix B of Subpart B--Places and Rates at Which Differentials Are 
Paid

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

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


Sec. 591.201  Definitions.

    In this subpart--
    Agency means an Executive agency as defined in section 105 of title 
5, United States Code, but does not include Government-controlled 
corporations.
    Bureau of Labor Statistics (BLS) means the Bureau of Labor 
Statistics of the Department of Labor.
    Commonwealth of the Northern Mariana Islands (CNMI) means the 
Commonwealth of the Northern Mariana Islands, which is part of the 
Guam/CNMI COLA area.
    Consumer Expenditure Survey (CES) means the BLS survey of consumers 
and their expenditures.
    Consumer Price Index (CPI) means the BLS survey of the change of 
consumer prices over time.
    Cost-of-living allowance (COLA) means an allowance that the Office 
of Personnel Management (OPM) establishes under 5 U.S.C. 5941 at a 
location in a nonforeign area where living costs are substantially 
higher than in the Washington, DC area.
    Cost-of-living allowance area means a geographic area for which OPM 
has authorized a COLA. COLA areas are listed in Sec. 591.207.
    Detailed Expenditure Category (DEC) means the lowest level of 
expenditure shown in tabulated nationwide CES data.
    Major Expenditure Group (MEG) means one of the nine major groups 
into which OPM categorizes expenditures. These categories are food, 
shelter and utilities, clothing, transportation, household furnishings 
and supplies, medical, education and communication, recreation, and 
miscellaneous.
    Nonforeign area means one of the areas listed in Sec. 591.205.
    Office of Personnel Management (OPM) means the Office of Personnel 
Management.
    Official duty station means the duty station for an employee's 
position of record as indicated on his or her most recent notification 
of personnel action. For an employee who is authorized to receive 
relocation allowances under 5 U.S.C. 5737 in connection with an 
extended assignment, the temporary duty station associated with that 
assignment is the employee's official duty station. Exception: A new 
duty station assignment that is followed within 3 working days by a 
reduction in force that results in the employee's separation before the 
employee is required to report for duty at the new location is not an 
official duty station.
    Post differential means an allowance OPM establishes under 5 U.S.C. 
5941 at a location in a nonforeign area where conditions of environment 
differ substantially from conditions of environment in the contiguous 
United States and warrant its payment as a recruitment incentive.
    Post differential area means a geographic area for which OPM 
authorizes a post differential. Post differential areas are listed in 
Sec. 591.231.
    Primary Expenditure Group (PEG) means one of approximately 40 
expenditure groups into which OPM categorizes expenditures. A PEG is 
the first level of categorization under the MEG.
    Rate of basic pay means the rate of pay fixed by statute for the 
position held by an individual before any deductions and exclusive of 
additional pay of any kind, such as overtime pay, night differential, 
extra pay for work on holidays, or other allowances and differentials. 
For firefighters covered by 5 U.S.C. 5545b (as provided in 
Sec. 550.1305(b) of this chapter), straight-time pay for regular 
overtime hours is basic pay.
    Washington, DC, area or DC area means the District of Columbia; 
Montgomery County, MD; Prince Georges County, MD; Arlington County, VA; 
Fairfax County, VA; Prince William County, VA; and the independent 
cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas 
Park, Virginia.

Cost-of-Living Allowances and Post Differentials


Sec. 591.202  Why does the Government pay COLAs?

    The Government pays COLAs as additional compensation to certain 
civilian Federal employees in specified nonforeign areas in 
consideration of higher living costs in the local area compared with 
living costs in the Washington, DC, area.


Sec. 591.203  Why does the Government pay post differentials?

    The Government pays post differentials to certain civilian Federal 
employees in specified nonforeign areas as a recruitment incentive 
based on conditions of environment in the local area compared with 
conditions in the continental United States. Post differentials are 
designed to attract persons from outside the area to work for the 
Federal Government in the post differential area.


Sec. 591.204  Who can receive COLAs and post differentials?

    (a) Agencies pay COLAs and post differentials authorized under this 
subpart to civilian Federal employees whose rates of basic pay are 
fixed by statute. The following pay plans are covered by this subpart:
    (1) General Schedule,
    (2) Veterans Health Administration (Department of Veterans 
Affairs),
    (3) Foreign Service (including the Senior Foreign Service),
    (4) Postal Service (where applicable under title 39, United States 
Code),
    (5) Administrative law judges paid under 5 U.S.C. 5372,

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    (6) Senior Executive Service (including the Federal Bureau of 
Investigation and Drug Enforcement Administration Senior Executive 
Service), and
    (7) Senior-level and scientific or professional positions paid 
under 5 U.S.C. 5376.
    (b) At its sole discretion and consistent with the intent of 5 
U.S.C. 5941, an agency may apply this subpart to other positions 
authorized by specific law.
    (c) Agencies pay COLAs to employees covered by paragraphs (a) or 
(b) of this section and whose official duty station is in a COLA area 
as defined in Sec. 591.207.
    (d) Agencies pay post differentials to employees covered by 
paragraphs (a) or (b) of this section whose official duty station or 
detail to temporary duty is in a post differential area as defined in 
Sec. 591.231 and who are eligible to receive a post differential under 
Sec. 591.233.


Sec. 591.205  Which areas are nonforeign areas?

    (a) The nonforeign areas are States, commonwealths, territories, 
and possessions of the United States outside the 48 contiguous United 
States and any additional areas the Secretary of State designates as 
being within the scope of Part II of Executive Order 10000, as amended.
    (b) The following areas are nonforeign areas:
    (1) State of Alaska;
    (2) State of Hawaii;
    (3) American Samoa (including the island of Tutuila, the Manua 
Islands, and all other islands of the Samoa group east of longitude 171 
degrees west of Greenwich, together with Swains Island);
    (4) Commonwealth of Puerto Rico;
    (5) Commonwealth of the Northern Mariana Islands;
    (6) Howland, Baker, and Jarvis Islands;
    (7) Johnston Atoll;
    (8) Kingman Reef;
    (9) Midway Atoll;
    (10) Navassaa Island;
    (11) Palmyra Atoll;
    (12) Territory of Guam;
    (13) United States Virgin Islands;
    (14) Wake Atoll;
    (15) Any small guano islands, rocks, or keys that, in pursuance of 
action taken under the Act of Congress, August 18, 1856, are considered 
as pertaining to the United States; and
    (16) Any other islands outside of the contiguous 48 states to which 
the U.S. Government reserves claim.

Cost-of-Living Allowances


Sec. 591.206  How does OPM establish COLA areas?

    (a) OPM designates, within nonforeign areas, areas where agencies 
pay employees a COLA by virtue of living costs that are substantially 
higher than those in the Washington, DC, area. In establishing the 
boundaries of COLA areas, OPM considers--
    (1) The existence of a well-defined economic community,
    (2) The availability of consumer goods and services,
    (3) The concentration of Federal employees covered by this subpart, 
and
    (4) Unique circumstances related to a specific location.
    (b) If a department or agency wants OPM to consider establishing or 
revising the definition of a COLA area, the head of the department or 
agency or his or her designee must submit a request in writing to OPM.


Sec. 591.207  Which areas are COLA areas?

    OPM has established the following COLA areas:
    (a) City of Anchorage, AK, and 80-kilometer (50-mile) radius by 
road, as measured from the Federal courthouse;
    (b) City of Fairbanks, AK, and 80-kilometer (50-mile) radius by 
road, as measured from the Federal courthouse;
    (c) City of Juneau, AK, and 80-kilometer (50-mile) radius by road, 
as measured from the Federal courthouse;
    (d) Rest of the State of Alaska;
    (e) City and County of Honolulu, HI;
    (f) County of Hawaii, HI;
    (g) County of Kauai, HI;
    (h) County of Maui (including Kalawao County), HI;
    (i) Commonwealth of Puerto Rico;
    (j) Territory of Guam and Commonwealth of the Northern Mariana 
Islands; and
    (k) U.S. Virgin Islands.


Sec. 591.208  How does OPM establish COLA rates?

    OPM establishes COLA rates based on price differences between the 
COLA area and the Washington, DC, area, plus an adjustment factor. OPM 
expresses price differences as indexes.
    (a) OPM computes price indexes for various categories of consumer 
expenditures.
    (b) OPM combines the price indexes using consumer expenditure 
weights to produce an overall price index for the COLA area.
    (c) To combine overall price indexes for COLA areas with multiple 
survey areas, OPM uses employment weights to combine overall price 
indexes by survey area for COLA areas. The COLA areas that have 
multiple survey areas are listed in Sec. 591.215(b).
    (d) OPM adds an adjustment factor to the overall price index for 
the COLA area.


Sec. 591.209  What is a price index?

    (a) The price index is the COLA area price divided by the DC area 
price and multiplied by 100.
    (b) Example:

    COLA Area Average Price for Item A = $1.233
    DC Area Average Price for Item A = $1.164

Computation:
    $1.233/$1.164 = 1.0592783
    1.0592783  x  100 = 105.92783.

    (c) In the case of the final index, OPM rounds the index to two 
decimal places.


Sec. 591.210  What are weights?

    (a) A weight is the relative importance or share of a subpart of a 
group compared with the total for the group. A weight is frequently 
expressed as a percentage. For example, in a pie chart, each wedge has 
a percentage that represents its relative importance or the size of the 
wedge compared with the whole pie.
    (b) OPM uses two kinds of weights: consumer expenditure weights and 
employment weights.
    (1) Consumer expenditure weights. The consumer expenditure weight 
for a category is the relative importance or share of that category in 
terms of total consumer expenditures. OPM derives consumer expenditure 
weights from the tabulated results of the Bureau of Labor Statistics 
(BLS) Consumer Expenditure Survey (CES).
    (2) Employment weights. The employment weight is the relative 
employment population of the survey area compared with the employment 
population of the COLA areas as a whole. OPM uses the number of General 
Schedule employees in the survey areas to compute employment weights. 
OPM uses these employment weights as described in Sec. 591.215(b).


Sec. 591.211  What are the categories of consumer expenditures?

    OPM uses three different types of categories: major expenditure 
groups, primary expenditure groups, and detailed expenditure 
categories.
    (a) Major expenditure groups. OPM groups expenditures into nine 
major expenditure groups (MEGs). These categories are food, shelter and 
utilities, clothing, transportation, household furnishings and 
supplies, medical, education and communication, recreation, and 
miscellaneous.
    (b) Primary expenditure groups. OPM identifies primary expenditure 
groups

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(PEGs) within each of the MEGs. There are approximately 40 PEGs.
    (c) Detailed expenditure categories. OPM uses the most detailed 
level of tabulated CES categories and identifies these as detailed 
expenditure categories (DECs). OPM classifies each DEC into one of the 
PEGs to aggregate DECs with similar demand and cost characteristics 
into PEGs. Alternatively, OPM may remove the DEC entirely from the list 
of expenditures. Therefore, the classification of the DECs into PEGs 
and sub-PEGs does not necessarily follow that used in published CES 
tables.


Sec. 591.212  How does OPM select survey items?

    (a) OPM selects a sufficient number of items to represent PEGs and 
reduce overall price index variability. In selecting these items, OPM 
applies the following guidelines. The item should be--
    (1) Relatively important (i.e., represent a DEC with a relatively 
large weight) within the PEG;
    (2) Relatively easy to find in both COLA and DC areas;
    (3) Relatively common, i.e., what people typically buy;
    (4) Relatively stable over time, e.g., not a fad item; and
    (5) Subject to similar supply and demand functions.
    (b) To the extent practical, the items OPM surveys in the COLA area 
must be identical to the items that OPM surveys in the DC area or be of 
closely similar quality and quantity, with quantity adjustments as 
necessary. An example of a quantity adjustment is converting prices for 
10 and 12 oz. packages to a price per pound.
    (c) For any DEC, OPM may specify items that differ in quality and 
quantity from other items specified for the same DEC. However, when OPM 
compares prices for such items between the COLA area and the DC area, 
OPM compares prices of like products.


Sec. 591.213  What prices does OPM collect?

    (a) OPM surveys the price charged to the consumer at the time of 
the survey. The price includes any sales, excise, or general business 
tax passed on to the consumer at the time of sale and any discounts, 
mark-downs, or ``sales'' in progress at the time the price was 
collected.
    (b) Exceptions:
    (1) OPM does not collect coupon prices, going-out-of-business 
prices, or area-wide distress sale prices.
    (2) OPM prices automobiles at dealers and obtains the sticker (i.e. 
non-negotiated) price for the model and specified options. The prices 
are the manufacturer's suggested retail price (including options), 
destination charges, additional shipping charges, appropriate dealer-
added items or options, dealer mark-up, and taxes.
    (3) OPM estimates prices for selected items, such as health 
insurance and K-12 education, based on employee usage of the item. For 
example, OPM estimates health insurance prices based on the employee's 
share of the premium costs and weights reflecting Federal enrollment, 
as reported in OPM's Central Personnel Data File, in the various plans 
available to Federal employees in each area.


Sec. 591.214  How does OPM collect prices?

    (a) OPM collects most prices by visiting or calling retail outlets 
in each survey area and observing or verbally obtaining the item 
prices.
    (b) OPM prices some items by catalog, Internet, or a similar 
source. Other items, not normally sold within an area, may be priced in 
a different area. In either case, the price of such items includes any 
applicable taxes, shipping, and handling charges. When an item is 
normally sold within an area but is not available at the time of 
survey, OPM may, on a case-by-case basis, use the price of the item in 
a neighboring survey or COLA area.


Sec. 591.215  Where does OPM collect prices in the COLA and DC areas?

    (a) Survey areas. Each COLA area has one survey area, except Hawaii 
County, HI, and the U.S. Virgin Islands COLA areas. Hawaii County has 
two survey areas: the City of Hilo and the Kailua-Kona area. The U.S. 
Virgin Islands also has two survey areas: the Island of St. Croix and 
the Islands of St. Thomas and St. John. The Washington, DC, area has 
three survey areas: the District of Columbia, the Maryland suburbs of 
the District of Columbia, and the Virginia suburbs of the District of 
Columbia. OPM collects non-housing data throughout the survey area. OPM 
may collect housing data throughout the survey area or in specific 
housing data collection areas. The following table shows the survey 
areas:

                                        Survey and Data Collection Areas
----------------------------------------------------------------------------------------------------------------
             COLA areas and reference areas                                    Survey area
----------------------------------------------------------------------------------------------------------------
Anchorage..............................................  City of Anchorage.
Fairbanks..............................................  City of Fairbanks.
Juneau.................................................  Juneau, Mendenhall
Rest of Alaska.........................................  See paragraph (c) of this section.
Honolulu...............................................  City and County of Honolulu.
Hawaii County..........................................  City of Hilo, Kailua-Kona area.
Kauai..................................................  Kauai Island.
Maui...................................................  Maui Island.
Guam & CNMI............................................  Guam.
Puerto Rico............................................  San Juan area.
U.S. Virgin Islands....................................  St. Croix, St. Thomas, St. John (housing data only).
Washington, DC--DC.....................................  District of Columbia.
Washington, DC--MD.....................................  Montgomery County and Prince Georges County.
Washington, DC--VA.....................................  Arlington County, Fairfax County, Prince William
                                                          County, City of Alexandria, City of Fairfax, City of
                                                          Falls Church, City of Manassas, and City of Manassas
                                                          Park.
----------------------------------------------------------------------------------------------------------------

    (b) Hawaii County and the U.S. Virgin Islands. In both Hawaii 
County and the U.S. Virgin Islands, OPM averages the overall indexes 
from the two survey areas using Federal employment weights. For the 
Washington, DC, area, OPM averages the indexes from the three survey 
areas using equal weights.
    (c) Rest of the State of Alaska COLA area. OPM may collect survey 
data onsite, use alternative indicators of relative living costs (e.g., 
price and cost information published by the University of Alaska), or 
both. If the use of alternative indicators would result in a COLA rate 
reduction, OPM will conduct onsite surveys in one or more locations in 
the Rest of the State of Alaska COLA

[[Page 56746]]

area, before making a reduction, to ensure that the reduction is 
warranted.


Sec. 591.216  In which outlets does OPM collect prices?

    OPM collects prices in popular outlets in each survey area. OPM 
selects these outlets based on their proximity to the housing data 
collection areas, accessibility by road, physical size, advertising, 
and other characteristics that reflect sales volume. To the extent 
practical, OPM prices like items in the same types of outlets in the 
COLA areas and the Washington, DC, area. As warranted, OPM also may 
conduct point-of-purchase surveys and select outlets based on the 
results of those surveys.


Sec. 591.217  For what purposes might OPM survey COLA recipients and 
other Federal employees?

    From time to time, OPM may conduct surveys of Federal employees in 
the COLA areas and/or the Washington, DC, area to determine where 
employees shop and what they spend on certain goods or services and to 
collect other information related to the price surveys and the 
calculation of price indexes.


Sec. 591.218  How does OPM compute price indexes?

    Except for shelter and energy utilities, OPM averages by item the 
prices collected in each survey area. For the Washington, DC, area, OPM 
computes a simple average for each item based on the average prices 
from each DC survey area. On an item-by-item basis, OPM divides the 
COLA survey area average price by the DC average price and produces a 
price index.


Sec. 591.219  How does OPM compute shelter price indexes?

    (a) In addition to rental and rental equivalence prices and/or 
estimates, OPM obtains for each unit surveyed information about the 
important characteristics of the unit, such as size, number of 
bathrooms, and other amenities that reflect the quality of the unit.
    (b) OPM then uses these characteristics and rental prices and/or 
estimates in hedonic regressions (a type of multiple regression) to 
compute for each COLA area the price index for rental and/or rental 
equivalent units of comparable quality and size between the COLA survey 
area and the Washington, DC area.


Sec. 591.220  How does OPM calculate energy utility cost indexes?

    (a) OPM calculates energy utility cost indexes based on the 
relative cost of maintaining a standard size dwelling in each area at a 
given ambient temperature and the cost of other energy uses. Although 
the dwelling size may vary from one COLA survey area to another, OPM 
compares the utility cost for the same size dwelling in the COLA survey 
area and the Washington, DC area.
    (b) OPM applies the following six-step process to compute a cost 
index(es) for heating and cooling a standard home to a given ambient 
temperature and to combine the cost index(es) by energy type (e.g., 
electricity and natural gas) with cost indexes for other energy uses.
    (1) Step 1. OPM obtains technical information about the 
requirements by major energy type for heating and cooling a standard 
size dwelling, built according to current local building practices and 
codes in each area, given local climatic conditions (e.g., seasonal 
temperature and humidity). OPM also obtains similar information for use 
of energy types in other household operations (e.g., hot water, 
cooking, cleaning, recreation).
    (2) Step 2. OPM obtains from the shelter survey, a survey of 
Federal employees, or other appropriate sources, information on 
dwelling size and the types and prevalence of heating and cooling 
equipment and energy types (e.g., electricity, gas, and oil) in each 
area.
    (3) Step 3. OPM computes estimates of total home energy 
requirements by energy type attributable to heating and cooling plus 
all other household energy uses for the COLA survey area and the 
Washington, DC area.
    (4) Step 4. OPM surveys utility prices for each major energy type 
appropriate to the area.
    (5) Step 5. OPM combines the above data to produce for each COLA 
survey area the cost of maintaining the standard size dwelling at a 
given ambient temperature and the cost of other household energy uses.
    (6) Step 6. OPM compares the COLA survey area cost with the DC area 
cost to produce a price index.


Sec. 591.221  How does OPM compute the consumer expenditure weights it 
uses to combine price indexes?

    OPM uses the following ten-step process to compute consumer 
expenditure weights:
    (a) Step 1. OPM uses the latest BLS tabulated CES data nationwide 
and for the Washington, DC, area.
    (b) Step 2. In both the nationwide and DC area tabulated data, OPM 
replaces the homeowners' expenditures for shelter with estimated rental 
values of owned homes that are available elsewhere in tabulated CES 
data. These replacements are consistent with the rental equivalence 
approach OPM uses in the COLA model.
    (c) Step 3. OPM selects the expenditures for the central income 
groups in the nationwide CES tabulation.
    (d) Step 4. OPM calculates the expenditure shares for each income 
group by dividing each DEC or aggregate expenditure by total 
expenditures. OPM also calculates expenditure shares for total 
nationwide expenditures.
    (e) Step 5. OPM averages the central income groups' shares to yield 
a nationwide ``democratic'' distribution of expenditure shares at the 
lowest level of expenditure and aggregates up to total expenditure.
    (f) Step 6. OPM computes a set of ratios by dividing each 
expenditure share of the nationwide ``democratic'' distribution by the 
corresponding expenditure share of the total national distribution.
    (g) Step 7. OPM computes estimated democratic expenditures for 
Washington DC for each reported DC aggregate by multiplying the 
reported expenditure by the corresponding ratio derived in Step 6.
    (h) Step 8. For each DEC and aggregate not provided in the 
tabulated CES for DC, OPM computes expenditures for DC by distributing 
the next higher available DC expenditure calculated in step 7 using the 
nationwide ``democratic'' patterns derived in step 5.
    (i) Step 9. As described in Sec. 591.211(c), OPM classifies each 
DEC and aggregate into PEGs.
    (j) Step 10. OPM computes expenditure weights by dividing each DEC 
or aggregate by the total expenditure derived from the DC expenditure 
computed in step 8. Therefore, the sum of the MEGs, PEGs, and DECs, 
will separately total 100, i.e., so that all consumer expenditures in 
the original tabulation are accounted for.


Sec. 591.222  How does OPM use the expenditure weights to combine price 
indexes?

    OPM uses a three-step process to combine price indexes.
    (a) Step 1. For each DEC represented by one or more items for which 
OPM could make valid price comparisons (e.g., OPM was able to collect 
representative prices in both the COLA and DC areas), OPM computes the 
unweighted geometric average of the price index(es) of all item(s) 
representing the DEC.
    (b) Step 2. OPM multiplies the price index for each DEC by its 
expenditure weight, sums the cross products, and

[[Page 56747]]

divides by the sum of the weights used in the calculation. This 
produces a price index for the level of aggregation (e.g., PEG or sub-
PEG) in which the DEC is categorized.
    (c) Step 3. OPM repeats the process described in Step 2 at each 
level of aggregation within the PEG to produce a price index for the 
PEG, at the PEG level to produce an index for the MEG, and at the MEG 
level to produce the overall price index for the survey area.


Sec. 591.223  When does OPM conduct COLA surveys?

    (a) OPM conducts a survey in each COLA area once every 3 years on a 
rotational basis and surveys the Washington, DC, area concurrently with 
each COLA area survey. The order of the COLA area surveys is as 
follows:
    (1) Year 1. All COLA areas in the Commonwealth of Puerto Rico and 
the U.S. Virgin Islands.
    (2) Year 2. All COLA areas in the State of Alaska, except as 
provided in paragraph (b)(2) of this section.
    (3) Year 3. All COLA areas in the State of Hawaii and the Territory 
of Guam and CNMI.
    (b) Exceptions:
    (1) Nothing in this subpart precludes OPM from conducting interim 
surveys or implementing some other change in response to conditions 
caused by a natural disaster or similar emergency, provided OPM 
publishes a notice or rule in the Federal Register explaining the 
change and the reason(s) for it.
    (2) As provided in Sec. 591.215(c), OPM does not conduct surveys in 
the Rest of the State of Alaska COLA area unless COLA rate reductions 
appear warranted.


Sec. 591.224  How does OPM adjust price indexes between surveys?

    (a) OPM adjusts price indexes between the triennial surveys in each 
COLA area that is not surveyed in that year. To do this, OPM uses the 
annual or biennial change in the Consumer Price Index (CPI) for the 
COLA area relative to the annual or biennial change in the CPI for the 
Washington, DC, area. OPM uses the annual change for those areas 
surveyed the preceding year. OPM uses the biennial change for those 
areas surveyed 2 years before.
    (b) This section applies beginning with the effective date of the 
results of the second survey conducted in Puerto Rico and the U.S. 
Virgin Islands under these regulations.


Sec. 591.225  Which CPIs does OPM use?

    OPM uses the following CPIs:
    (a) For the Washington, DC, area--the BLS Consumer Price Index, All 
Urban Consumers (CPI-U);
    (b) For all COLA areas in the State of Alaska--the BLS CPI-U for 
Anchorage, AK;
    (c) For all COLA areas in the State of Hawaii and for Guam and the 
CNMI--the BLS CPI-U for Honolulu, HI; and
    (d) For Puerto Rico and the U.S. Virgin Islands--the Puerto Rico 
CPI as produced by the Puerto Rico Department of Work and Human 
Resources.


Sec. 591.226  How does OPM apply the CPIs?

    (a) OPM uses a three-step process to adjust price indexes by 
relative annual or biennial changes in the CPIs. For Steps 1 and 2, OPM 
computes the annual change by dividing the CPI from 1 year after the 
survey by the CPI from the time of the survey. OPM computes the 
biennial change by dividing the CPI from 2 years after the survey by 
the CPI from the time of the survey.
    (1) Step 1. OPM computes the annual or biennial CPI change for the 
COLA area.
    (2) Step 2. OPM computes the annual or biennial CPI change for the 
DC area.
    (3) Step 3. OPM multiplies the COLA area price index from the last 
survey by the COLA area CPI change computed in Step 1 divided by the DC 
area CPI change computed in Step 2. The adjusted price index is rounded 
to the second decimal place.
    (b) Example:

------------------------------------------------------------------------
                                                          2008     2009
------------------------------------------------------------------------
COLA Area CPI.........................................    172.2    174.7
DC Area CPI...........................................    159.7    161.9
COLA Area Survey Index................................   117.33      \1\
COLA Area CPI Adjusted Index..........................      N/A  117.42
------------------------------------------------------------------------
1 No survey.



Computation:
117.33  x  (174.7/172.2) / (161.9/159.7) = 117.4159, which would round 
to 117.42.


Sec. 591.227  What adjustment factors does OPM add to the price 
indexes?

    OPM adds to the price index an adjustment factor that reflects 
differences iin the COLA area relative to the DC area. The following 
table shows the adjustment factor for each area:

------------------------------------------------------------------------
                                                           Amount added
                        COLA area                          to the price
                                                               index
------------------------------------------------------------------------
Anchorage, AK...........................................             7.0
Fairbanks, AK...........................................             9.0
Juneau, AK..............................................             9.0
Rest of the State of Alaska.............................             9.0
City and County of Honolulu, HI.........................             5.0
Hawaii County, HI.......................................             7.0
Kauai County, HI........................................             7.0
Maui County, HI.........................................             7.0
Guam and CNMI...........................................             9.0
Commonwealth of Puerto Rico.............................             7.0
U.S. Virgin Islands.....................................             9.0
------------------------------------------------------------------------

Sec. 591.228  How does OPM convert the price index plus adjustment 
factor to a COLA rate?

    (a) OPM converts the price index plus the adjustment factor to a 
COLA rate as shown in the following table:

------------------------------------------------------------------------
                                      COLA rate subject to paragraph (b)
 Price index plus adjustment factor            of this section
------------------------------------------------------------------------
Equal to or greater than 124.50....  25 percent.
Equal to or greater than 102.00 but  Price index plus the adjustment
 less than 124.50.                    factor, minus 100, expressed to
                                      the nearest whole percent.
Less than 102.00...................  0 percent.
------------------------------------------------------------------------

    (b) This section is applicable on an area-by-area basis beginning 
with the effective date of the results of the first survey conducted in 
each area.
    (c) OPM may reduce the COLA rate in any area by no more than 1 
percentage point in any 12-month period. Any reductions cannot be 
effective until the effective date of the first survey conducted in 
Hawaii and Guam and CNMI under these regulations.


Sec. 591.229  How does OPM inform agencies and employees of COLA rate 
changes?

    OPM publishes COLA area survey summary reports, MEG and PEG 
indexes, and COLA rates in the Federal Register. OPM makes survey data 
and other information available to the public to the extent authorized 
by the Freedom of Information Act and the Privacy Act.

[[Page 56748]]

Post Differentials


Sec. 591.230  When does OPM establish post differential areas?

    (a) OPM establishes post differential areas in response to agency 
requests when--
    (1) Conditions of environment within the post differential area 
differ substantially from conditions of environment in the continental 
United States, and
    (2) The major Federal employers within the area believe payment of 
a post differential is warranted as a recruitment incentive to attract 
candidates from outside the post differential area to work for the 
Government in the post differential area.
    (b) If a department or agency wants OPM to consider establishing or 
revising the definition of a post differential area, the head of the 
department or agency or his or her designee must submit a request in 
writing to OPM.


Sec. 591.231  Which areas are post differential areas?

    OPM has established the following post differential areas:
    (a) American Samoa as defined in Sec. 591.205,
    (b) Territory of Guam,
    (c) Commonwealth of the Northern Mariana Islands,
    (d) Johnston Atoll (including Sand Island),
    (e) Midway Atoll, and
    (f) Wake Atoll.


Sec. 591.232  How does OPM establish and review post differentials?

    (a) OPM establishes a post differential if Government agencies 
require it for recruitment purposes and if one or more of the following 
conditions exist:
    (1) Extraordinarily difficult living conditions,
    (2) Excessive physical hardship, and/or
    (3) Notably unhealthful conditions.
    (b) OPM periodically reviews with Federal agencies whether 
conditions of environment have changed in the post differential areas 
and whether payment of the post differential continues to be warranted 
as a recruitment incentive.


Sec. 591.233  Who can receive a post differential?

    An employee must meet all of the following conditions to be 
eligible to receive a post differential:
    (a) The employee must be a citizen or national of the United 
States,
    (b) The employee's official duty station or detail to temporary 
duty must be in the post differential area, and
    (c) Immediately prior to being assigned to duty in the post 
differential area, the employee must have maintained his or her actual 
place(s) of residence outside the post differential area for an 
appropriate period of time (generally at least 1 year or more), except 
as provided in Sec. 591.234.


Sec. 591.234  Under what circumstances may people recruited locally 
receive a post differential?

    (a) Current residents of the area qualify for a post differential 
if they were originally recruited from outside the differential area 
and have been in substantially continuous employment by the United 
States or by U.S. firms, interests, or organizations.
    (b) Examples of persons recruited locally but eligible to receive a 
post differential include, but are not limited to--
    (1) Those who were originally recruited from outside the area and 
have been in substantially continuous employment by other Federal 
agencies, contractors of Federal agencies, or international 
organizations in which the U.S. Government participates and whose 
conditions of employment provide for their return transportation to 
places outside the post differential area,
    (2) Those who are temporarily present in the post differential area 
for travel or formal study at the time they are hired and have 
maintained actual places of residence outside the area for an 
appropriate period of time, and
    (3) Those who are discharged from U.S. military service in the 
differential area to accept employment with a Federal agency and have 
maintained actual places of residence outside the differential area for 
an appropriate period of time.

Program Administration


Sec. 591.235  When do payments begin?

    (a) Agencies begin paying an employee a COLA or post differential 
on the effective date of the change in the employee's official duty 
station to a duty station within the COLA or post differential area or, 
in the case of local recruitment, on the effective date of the 
appointment.
    (b) For an employee detailed to temporary duty in a post 
differential area and who is otherwise eligible for a post 
differential, agencies must begin paying a post differential after 42 
consecutive calendar days of temporary duty in the post differential 
area.


Sec. 591.236  When do payments end?

    Subject to Sec. 591.237(a), agencies stop paying an employee a COLA 
or post differential on--
    (a) Separation,
    (b) The effective date of assignment or transfer to a new official 
duty station outside the COLA or post differential area, or
    (c) In the case of an employee on detail to temporary duty in a 
post differential area, the ending date of the detail.


Sec. 591.237  Under what circumstances may employees on leave or travel 
receive a COLA and/or post differential?

    (a) An employee on leave or travel may receive a COLA or post 
differential only if the agency anticipates that the employee will 
return to duty in the area. Exceptions: If the employee does not return 
to duty in the area, the agency may still pay a COLA and/or a post 
differential, subject to paragraph (b) of this section, to an employee 
on leave or travel if the agency determines that--
    (1) It is in the public interest not to return the employee to the 
duty station, or
    (2) The employee will not return because of compelling personal 
reasons or circumstances over which the employee has no control.
    (b) Post differentials. Agencies may pay a post differential to an 
employee only during the employee's first 42 consecutive calendar days 
of absence from the post differential area.


Sec. 591.238  How do agencies pay COLAs and post differentials?

    (a) Agencies pay COLAs and post differentials as a percentage of an 
employee's hourly rate of basic pay, including a retained rate of pay 
under 5 U.S.C. 3594(c) or 5363, for those hours during which the 
employee receives basic pay. This includes all periods of paid leave, 
detail, or travel status outside the COLA or post differential area.
    (b) Agencies pay employees eligible for both a COLA and a post 
differential the full amount of the COLA, plus so much of the post 
differential as will not cause the combined total of the COLA and post 
differential to exceed 25 percent of the hourly rate of basic pay.


Sec. 591.239  How do agencies treat COLAs and post differentials for 
the purpose of overtime pay and other entitlements?

    (a) Agencies include COLAs in the employee's straight time rate of 
pay and include COLAs and post differentials in an employee's regular 
rate of pay for computing overtime pay entitlements for nonexempt 
employees under the Fair Labor Standards Act of 1938, as amended.
    (b) Agencies may not include a COLA or post differential as part of 
an employee's rate of basic pay for the purpose of computing 
entitlements to

[[Page 56749]]

overtime pay, retirement, life insurance, or any other additional pay, 
COLA, or post differential under title 5, United States Code.
    (c) Payment of a COLA or post differential is not an equivalent 
increase in pay within the meaning of 5 U.S.C. 5335.


Sec. 591.240  How are agency and employee representatives involved in 
the administration of the COLA and post differential programs?

    (a) OPM may establish a COLA Advisory Committee in each COLA survey 
area. The committees are composed of agency and employee 
representatives from the COLA survey area and one or more 
representatives from OPM.
    (b) To the extent practical, the COLA Advisory Committees 
coordinate and work with the Survey Implementation Committee 
established pursuant to Caraballo, et al. v. United States, No. 1997-
0027 (D.V.I).


Sec. 591.241  What are the key activities of the COLA Advisory 
Committees?

    (a) The COLA Advisory 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
    (5) Assist OPM in disseminating information to affected employees 
about the living-cost surveys and the COLA program.
    (b) The committees also may advise OPM on special situations or 
conditions, such as hurricanes and earthquakes, as they relate to OPM's 
authority under Sec. 591.223(b) to conduct interim surveys or implement 
some other change in response to conditions caused by a natural 
disaster or similar emergency.


Sec. 591.242  What is the tenure of a COLA Advisory Committee?

    OPM may establish a COLA Advisory Committee in each area prior to 
each living-cost survey conducted in that area. OPM will appoint 
committee members for 3-year renewable terms. To the extent practical, 
the committee will continue to exist between surveys, but OPM may 
periodically review with the committee whether there is a continuing 
need for the committee.


Sec. 591.243  How many members are on each COLA Advisory Committee?

    A COLA Advisory Committee has up to 12 members composed of OPM 
representatives and other agency and employee representatives, unless 
OPM determines that the committee should be larger. In determining the 
number of committee members, OPM considers the amount of work the 
committee is likely to be requested to do (based on the size and 
complexity of the local living-cost survey) and the availability of 
employee and agency representatives to participate as committee 
members.


Sec. 591.244  How does OPM select COLA Advisory Committee members?

    (a) In establishing a COLA Advisory Committee, OPM invites local 
agencies and employee organizations to nominate committee members. OPM 
also invites COLA Defense Corporations and the local Federal Executive 
Board or Federal Executive Association each to nominate committee 
members. Subject to Sec. 591.243, OPM selects committee members from 
these nominations in a manner designed to achieve a balanced 
representation that is reflective of agencies and employee 
organizations in the area. In consultation with the committee, OPM may 
select additional nominees to serve as alternates to the primary 
committee members. OPM designates not more than two OPM representatives 
to serve on each committee.
    (b) Each Executive agency, as defined in 5 U.S.C. 105, must 
cooperate and release appointed employees for committee proceedings and 
activities unless the agency can demonstrate that exceptional 
circumstances directly related to accomplishing the mission of the 
employee's work unit require his or her presence on the job. Executive 
agency employees serving as committee members are considered to be on 
official assignment to an interagency function, rather than on leave, 
and are eligible to receive reimbursement for authorized travel 
expenses from their respective agencies.

Appendix A of Subpart B--Places and Rates at Which Allowances Are Paid

    This appendix lists the places approved for a cost-of-living 
allowance and shows the authorized allowance rate for each. The 
allowance percentage rate shown is paid as a percentage of an 
employee's rate of basic pay. The rates are subject to change based 
on the results of future surveys.

------------------------------------------------------------------------
                                                              Allowance
                    Geographic coverage                          rate
                                                              (percent)
------------------------------------------------------------------------
State of Alaska:
    City of Anchorage and 80-kilometer (50-mile) radius by         25.00
     road..................................................
    City of Fairbanks and 80-kilometer (50-mile) radius by         25.00
     road..................................................
    City of Juneau and 80-kilometer (50-mile) radius by            25.00
     road..................................................
    Rest of the State......................................        25.00
State of Hawaii:
    City and County of Honolulu............................        25.00
    County of Hawaii.......................................        16.50
    County of Kauai........................................        23.25
    County of Maui and County of Kalawao...................        23.75
Territory of Guam and Commonwealth of the Northern Mariana         25.00
 Islands...................................................
Commonwealth of Puerto Rico................................        11.50
U.S. Virgin Islands........................................        22.50
------------------------------------------------------------------------

Appendix B of Subpart B--Places and Rates at Which 
Differentials Are Paid

    This appendix lists the places where a post differential has 
been approved and shows the differential rate to be paid to eligible 
employees. The differential percentage rate shown is paid as a 
percentage of an employee's rate of basic pay.

[[Page 56750]]



------------------------------------------------------------------------
                                                             Percentage
                    Geographic coverage                     differential
                                                                rate
------------------------------------------------------------------------
American Samoa (including the island of Tutuila, the Manua          25.0
 Islands, and all other islands of the Samoa group east of
 longitude 171 deg. west of Greenwich, together with
 Swains Island)...........................................
Johnston Atoll............................................          25.0
Midway Atoll..............................................          25.0
Territory of Guam and Commonwealth of the Northern Mariana          20.0
 Islands..................................................
Wake Atoll................................................          25.0
------------------------------------------------------------------------

[FR Doc. 01-28058 Filed 11-8-01; 8:45 am]
BILLING CODE 6325-39-P