[Federal Register Volume 71, Number 208 (Friday, October 27, 2006)]
[Proposed Rules]
[Pages 63176-63177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-17950]



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Part IV





Office of Personnel Management





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5 CFR Part 591



 Nonforeign Area Cost-of-Living Allowance Rates; Alaska, Puerto Rico, 
and the U.S. Virgin Islands; Proposed Rule and Notices

  Federal Register / Vol. 71, No. 208 / Friday, October 27, 2006 / 
Proposed Rules  

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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 591

RIN 3206-AL12


Nonforeign Area Cost-of-Living Allowance Rates; Alaska, Puerto 
Rico, and the U.S. Virgin Islands

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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SUMMARY: The Office of Personnel Management is publishing a proposed 
regulation to change the cost-of-living allowance rates received by 
certain white-collar Federal and U.S. Postal Service employees in 
Alaska, Puerto Rico, and the U.S. Virgin Islands. The changes are the 
result of living-cost surveys conducted by OPM in 2005 and interim 
adjustments OPM calculated based on relative Consumer Price Index 
differences between the cost-of-living allowance areas and the 
Washington, DC area.

DATES: We will consider comments received on or before December 26, 
2006.

ADDRESSES: Send or deliver written comments to Jerome D. Mikowicz, 
Acting Deputy Associate Director for Pay and Performance Policy, 
Strategic Human Resources Policy Division, 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 Federal agencies to pay cost-of-living allowances (COLAs) to 
white-collar Federal and U.S. Postal Service employees stationed in 
Alaska, Hawaii, Guam and the Northern Mariana Islands, Puerto Rico, and 
the U.S. Virgin Islands (USVI). Executive Order 10000, as amended, 
delegates to the Office of Personnel Management (OPM) the authority to 
administer nonforeign area COLAs and prescribes certain operational 
features of the program. OPM conducts living-cost surveys in each 
allowance area and in the Washington, DC area to determine whether, and 
to what degree, COLA area living costs are higher than those in the DC 
area. OPM sets the COLA rate for each area based on the results of 
these surveys.
    As required by section 591.223 of title 5, Code of Federal 
Regulations, OPM conducts COLA surveys once every 3 years on a rotating 
basis. For areas not surveyed during a particular year, OPM adjusts 
COLA rates by the relative change in the Consumer Price Index (CPI) for 
the COLA area compared with the Washington, DC area. (See 5 CFR 
591.224-226.) OPM adopted these regulations pursuant to the stipulation 
of settlement in Caraballo et al. v. United States, No. 1997-0027 
(D.V.I), August 17, 2000. Caraballo was a class-action lawsuit which 
resulted in many changes in the COLA methodology and regulations. 
Although most of the changes were effective in 2002 when the new 
regulations became effective, this is the first year that OPM will 
apply the interim adjustments because the settlement and regulations 
provide that OPM must apply CPI-based interim adjustments beginning 
with the effective date of the results of the 2005 survey conducted in 
Puerto Rico and the U.S. Virgin Islands. (See 5 CFR 591.224(b).)
    OPM conducted living-cost surveys in Puerto Rico, the U.S. Virgin 
Islands, and the Washington, DC area in the spring of 2005. We are 
publishing the results of these surveys in the 2005 Nonforeign Area 
Cost-of-Living Allowance Survey Report: Caribbean and Washington, DC, 
Areas, which accompanies this proposed rule.
    As described in the 2005 survey report, OPM compared the results of 
the COLA area surveys with the results of the DC area survey to compute 
a living-cost index for each of the COLA areas. The results of the 
living-cost surveys indicate an increase in the COLA rate for the U.S. 
Virgin Islands from 23 percent to 25 percent and a decrease in the COLA 
rate for Puerto Rico from 10.5 percent to 9.5 percent.
    OPM also computed interim adjustments based on the relative change 
in the CPI for the Alaska, Hawaii, and Guam and the Northern Mariana 
Islands COLA areas. We are publishing the calculation of these interim 
adjustments in a notice, which also accompanies this proposed rule. The 
interim adjustments indicate that the COLA rates for the Hawaii and 
Guam COLA areas are currently set at the appropriate level but that the 
Anchorage, Fairbanks, and Juneau, Alaska, COLA rates should be reduced 
by 1 percentage point in each area, from 24 percent, which is the 
current COLA rate in each of these areas, to 23 percent.
    However, 5 CFR 591.228(c) limits COLA rate decreases to 1 
percentage point in a 12-month period, and OPM implemented COLA rate 
decreases in Anchorage, Fairbanks, Juneau, and Puerto Rico effective on 
the first pay period beginning on or after September 1, 2006. 
Therefore, under this proposed rule, the COLA rate reductions in these 
areas would take effect on the first day of the first pay period 
beginning 12 months after the effective date of the 2006 reduction. For 
example, if the COLA rate reduction in 2006 was effective on Sunday, 
September 3, 2006, the 2007 COLA rate reduction would take effect on 
Sunday, September 16, 2007.

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

List of Subjects in 5 CFR Part 591

    Government employees, Travel and transportation expenses, Wages.

Office of Personnel Management.
Linda M. Springer,
Director.
    Accordingly, OPM proposes to amend subpart B of 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 5 CFR part 591 continues 
to read as follows:

    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.
    2. Revise appendix A of subpart B to read as follows:

Appendix A to Subpart B of Part 591--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 area. The 
allowance 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.

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                                                         Allowance rate
                 Geographic coverage                       (percent)
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State of Alaska:
    City of Anchorage and 80-kilometer (50-mile)                \1\ 23.0
     radius by road..................................
    City of Fairbanks and 80-kilometer (50-mile)                \1\ 23.0
     radius by road..................................
    City of Juneau and 80-kilometer (50-mile) radius            \1\ 23.0
     by road.........................................
    Rest of the State................................               25.0
State of Hawaii:
    City and County of Honolulu......................               25.0
    Hawaii County, Hawaii............................               17.0
    County of Kauai..................................               25.0
    County of Maui and County of Kalawao.............               25.0
Territory of Guam and Commonwealth of the Northern                  25.0
 Mariana Islands.....................................
Commonwealth of Puerto Rico..........................            \1\ 9.5
U.S. Virgin Islands..................................           \2\ 25.0
------------------------------------------------------------------------
\1\ The next COLA rate reductions in these areas would take effect on
  the first day of the first pay period beginning 12 months after the
  effective date of the 2006 reduction because 5 CFR 591.228(c) limits
  COLA rate decreases to 1 percentage point in a 12-month period.
\2\ The effective date for this COLA rate would be the first pay period
  beginning 30 days on or after the effective date of the final rule
  implementing the COLA rate.

 [FR Doc. E6-17950 Filed 10-26-06; 8:45 am]
BILLING CODE 6325-39-P