[Federal Register Volume 72, Number 172 (Thursday, September 6, 2007)]
[Proposed Rules]
[Pages 51200-51201]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-17638]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 72, No. 172 / Thursday, September 6, 2007 / 
Proposed Rules  

[[Page 51200]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 591

RIN 3206-AL28


Nonforeign Area Cost-of-Living Allowance Rates; Puerto Rico and 
Hawaii County, HI

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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

SUMMARY: The Office of Personnel Management (OPM) is proposing to 
change the cost-of-living allowance (COLA) rates received by certain 
white-collar Federal and U.S. Postal Service employees in Puerto Rico 
and Hawaii County, HI. The proposed rate changes are the result of 
interim adjustments OPM calculated based on relative Consumer Price 
Index differences between the cost-of-living allowance areas and the 
Washington, DC, area. OPM is also proposing an additional one-time 
adjustment to the Puerto Rico COLA rate based on the impact of the new 
sales tax in Puerto Rico.

DATES: We will consider comments received on or before November 5, 
2007.

ADDRESSES: Send or deliver comments to Charles D. Grimes III, Deputy 
Associate Director for Performance Management and Pay Systems, 
Strategic Human Resources Policy Division, Office of Personnel 
Management, Room 7300B, 1900 E Street, NW., Washington, DC 20415-8200; 
fax: (202) 606-4264; or e-mail: [email protected].

FOR FURTHER INFORMATION CONTACT: J. Stanley Austin, (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 
591.224-591.226.) OPM adopted these regulations pursuant to the 
stipulation for 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.
    OPM computed interim adjustments based on the relative change in 
the CPI for the Pacific and Caribbean COLA areas. A separate notice on 
the calculation of these interim adjustments accompanies this proposed 
rule. The interim adjustments indicate that, except for Hawaii County 
and Puerto Rico, the COLA rates for the Pacific and Caribbean COLA 
areas are currently set at the appropriate levels. For Hawaii County, 
the adjustments indicate that the COLA rate should be increased from 17 
percent to 18 percent. For Puerto Rico, the adjustments indicate the 
COLA rate should be increased from 10.5 percent to 11 percent. This 
increase in Puerto Rico supersedes the 1-percent reduction proposed by 
OPM on October 27, 2006, at 71 FR 63176, based on the 2005 survey 
results.

Puerto Rico Sales Tax Adjustment

    On July 4, 2006, the Puerto Rico government enacted the Tax Justice 
Act of 2006 (Act No. 117, HB 2193), which established a new 
Commonwealth sales and use tax of 5.5 percent and authorized an 
additional municipal sales and use tax of up to 1.5 percent. To measure 
the impact of the new sales tax on living costs in Puerto Rico, we 
applied the sales tax to covered items priced in OPM's 2005 Puerto Rico 
COLA survey. (The law exempted many items from coverage; e.g., most 
grocery items, cars, rent, prescription drugs, many professional 
services, health insurance, and school tuition.) We then recalculated 
the Puerto Rico price index incorporating the sales tax. The index 
increased by 1.9 points to 112.94, which translates to a COLA rate of 
13 percent. Therefore, to account for this additional cost to Federal 
employees in Puerto Rico, we are proposing to increase the Puerto Rico 
COLA rate to 13 percent.

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.

[[Page 51201]]



------------------------------------------------------------------------
                                                         Allowance rate
                 Geographic coverage                       (percent)
------------------------------------------------------------------------
State of Alaska:
    City of Anchorage and 80-kilometer (50-mile)                      24
     radius by road..................................
    City of Fairbanks and 80-kilometer (50-mile)                      24
     radius by road..................................
    City of Juneau and 80-kilometer (50-mile) radius                  24
     by road.........................................
    Rest of the State................................                 25
State of Hawaii:
    City and County of Honolulu......................                 25
    Hawaii County, Hawaii............................                 18
    County of Kauai..................................                 25
    County of Maui and County of Kalawao.............                 25
Territory of Guam and Commonwealth of the Northern                    25
 Mariana Islands.....................................
Commonwealth of Puerto Rico..........................                 13
U.S. Virgin Islands..................................                 25
------------------------------------------------------------------------

 [FR Doc. E7-17638 Filed 9-5-07; 8:45 am]
BILLING CODE 6325-39-P