[Federal Register Volume 76, Number 109 (Tuesday, June 7, 2011)]
[Rules and Regulations]
[Pages 32859-32863]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-13993]



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  Federal Register / Vol. 76, No. 109 / Tuesday, June 7, 2011 / Rules 
and Regulations  

[[Page 32859]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 531

RIN 3206-AM25


General Schedule Locality Pay Areas

AGENCY: U.S. Office of Personnel Management.

ACTION: Final rule.

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

SUMMARY: On behalf of the President's Pay Agent, the U.S. Office of 
Personnel Management is issuing final regulations on the locality pay 
program for General Schedule employees. The regulations, which became 
applicable as an interim rule on January 2, 2011, established separate 
locality pay areas for the States of Alaska and Hawaii and extended 
coverage of the Rest of U.S. locality pay area to include American 
Samoa, the Commonwealth of Puerto Rico, the Commonwealth of the 
Northern Mariana Islands, the Territory of Guam, the U.S. Virgin 
Islands, and all other U.S. possessions listed in 5 CFR 591.205, 
applicable on the first day of the first pay period that began on or 
after January 1, 2011.

DATES: Effective on July 7, 2011 we are adopting as a final rule, with 
minor changes, the interim rule published at 75 FR 60285 on September 
30, 2010.
    Applicability Date: The regulations were applicable on the first 
day of the first pay period beginning on or after January 1, 2011.

FOR FURTHER INFORMATION CONTACT: Allan Hearne, (202) 606-2838; FAX: 
(202) 606-4264; e-mail: [email protected].

SUPPLEMENTARY INFORMATION: Section 5304 of title 5, United States Code, 
authorizes locality pay for General Schedule (GS) employees with duty 
stations in the United States and its territories and possessions. The 
Non-Foreign Area Retirement Equity Assurance Act of 2009 (NAREAA), 
Public Law 111-84, title XIX, subtitle B (October 28, 2009), extended 
locality pay to the States of Alaska and Hawaii and the U.S. 
territories and possessions effective in January 2010. While the 
statute included a sense of the Congress statement that one locality 
pay area cover the entire State of Alaska and one cover the entire 
State of Hawaii, it did not actually establish any new locality pay 
areas.
    Section 5304(f) of title 5, United States Code, authorizes the 
President's Pay Agent (the Secretary of Labor, the Director of the 
Office of Management and Budget, and the Director of the Office of 
Personnel Management (OPM)) to determine locality pay areas. The 
boundaries of locality pay areas must be based on appropriate factors, 
which may include local labor market patterns, commuting patterns, and 
the practices of other employers. The Pay Agent must give thorough 
consideration to the views and recommendations of the Federal Salary 
Council (Council), a body composed of experts in the fields of labor 
relations and pay policy and representatives of Federal employee 
organizations. The President appoints the members of the Council, which 
submits annual recommendations to the Pay Agent about the locality pay 
program.
    In its interim rule, the Pay Agent concluded that separate locality 
pay areas should be established for the States of Alaska and Hawaii 
because we have non-Federal salary survey data collected by the Bureau 
of Labor Statistic (BLS) in its National Compensation Survey (NCS) 
program showing pay disparities between General Schedule (GS) and non-
Federal pay well above that for the Rest of U.S. (RUS) locality pay 
area. Such action also coincides with the sense of the Congress 
statement in the NAREAA that these locations each be covered by a 
single separate locality pay area. The Pay Agent also concluded that 
the other non-foreign areas, which are not covered by the NCS program, 
should be treated like other locations in the United States where pay 
levels are lower than in the RUS area, or that cannot be surveyed 
separately and included them in the RUS area.

Development of New Survey Methodology

    In response to earlier requests of the Federal Salary Council, BLS 
has developed a method for using data from its much larger Occupational 
Employment Statistics (OES) program in conjunction with National 
Compensation Survey (NCS) data. The method assesses the impact of level 
of work on pay using NCS data so that OES data can be used to compare 
GS and non-Federal pay for the same levels of work in a geographic area 
as required by the locality pay statute. The President's Fiscal Year 
2011 budget included a proposal to use this new alternative approach 
for locality pay in order to free up BLS resources for use in other 
programs while extending the estimation of pay gaps to areas that are 
not present in the NCS sample. The Federal Salary Council and the Pay 
Agent plan to use the new OES model in the future.
    While BLS does not cover Guam, Puerto Rico, or the U.S. Virgin 
Islands under the NCS program, BLS does have a robust sample for these 
locations and for Anchorage and Honolulu under OES. The Federal Salary 
Council evaluated comparisons of GS and non-Federal pay for these 
locations before it submitted its views on the interim rule. Here are 
the results:

     Comparison of GS and Non-Federal Pay Using OES Data--March 2010
------------------------------------------------------------------------
                                            Non-Federal
                                            pay/GS pay    Location minus
                Location                     disparity     RUS disparity
                                             (percent)       (percent)
------------------------------------------------------------------------
Anchorage...............................           53.99           25.85
Honolulu................................           39.19           11.05
Guam....................................           -0.46          -28.60

[[Page 32860]]

 
Puerto Rico.............................          -15.31          -43.45
U.S. Virgin Islands.....................           15.24          -12.90
Rest of U.S.............................           28.14              NA
------------------------------------------------------------------------

The results indicate that non-Federal pay levels in Anchorage and 
Honolulu are well above those in the RUS area while non-Federal pay 
levels in Guam, Puerto Rico, and the U.S. Virgin Islands are well below 
those in the RUS area.

Federal Salary Council Comments

    The Federal Salary Council met during the comment period on the 
interim regulations and submitted the following comments supporting the 
Pay Agent's interim rule:

    ``The Non-Foreign Area Retirement Equity Assurance Act of 2009 
(the Act) extended locality pay to the ``non-foreign'' areas. The 
Pay Agent issued an interim regulation on September 30, 2010, making 
Alaska and Hawaii separate whole-State locality pay areas and adding 
American Samoa, the Commonwealth of the Northern Mariana Islands, 
Guam, Puerto Rico, the U.S. Virgin Islands, and U.S. territories and 
possessions to the Rest of U.S. locality pay area. The Pay Agent 
concluded Alaska and Hawaii should be separate areas based on NCS 
salary surveys in Anchorage and Honolulu that show higher non-
Federal pay levels than in the RUS area and a sense of Congress 
contained in the Act that Alaska and Hawaii should be separate 
whole-State areas. BLS does not conduct surveys under NCS in any of 
the other ``non-foreign'' areas. The Council concurs with the Pay 
Agent's action to make Alaska and Hawaii separate whole-State 
locality pay areas and include the other areas in the RUS locality 
pay area.
    BLS does include Guam, Puerto Rico, and the U.S. Virgin Islands 
under the OES program and applied its OES model to these locations. 
The results are included in Attachment 2. Based on the OES model, 
non-Federal pay levels in these locations are below those in the RUS 
area. However, since RUS is an average, it is likely about half of 
RUS is also below the average. Our policy in the past has been that 
the RUS locality rate should be the floor; no location should 
receive less than the RUS rate. We believe this is a good policy and 
should continue and apply to Guam, Puerto Rico, and the U.S. Virgin 
Islands.

    The Council's recommendations are posted at http://www.opm.gov/oca/fsc/recommendation10.pdf.

Comments Received

    OPM received 49 comments on the interim rule, including comments 
from an attorney representing employees in Caraballo v. U.S., Members 
of Congress representing American Samoa and Guam, and the Guam Federal 
Executive Association. Comments included:
     Some supported separate whole-State pay areas for Alaska 
and Hawaii as provided in the regulations.
     Some believe a higher rate should be approved for remote 
areas in Alaska. (OPM notes, however, that locality pay must be based 
on pay comparisons, not remoteness.)
     Some believe the statutory cap on locality pay is unfair. 
(OPM notes, however, that the caps are imposed by statute.)
     Some believe employees in the Northern Mariana Islands and 
Guam should receive a higher rate than Alaska and Hawaii due to 
remoteness and isolation. (OPM notes, however, that locality pay must 
be based on pay comparisons, not remoteness.)
     Some believe Hawaii should receive Washington-Baltimore 
locality pay. (OPM notes, however, that locality pay salary survey 
results show that is not warranted by local labor market rates.)

Many of the comments expressed the view that Pacific locations should 
receive either the Hawaii or Washington-Baltimore locality pay rate due 
to the effect of remoteness and isolation from the mainland. We respond 
in detail below to comments submitted by the attorney, since they 
expressed similar views and were the most detailed.

Comment 1

    ``It is my view that including transoceanic non-foreign areas in 
the Rest of U.S. locality pay area is contrary to the fundamental 
premise of the Caraballo settlement.''
    and
    ``The foundation of the Caraballo settlement is the recognition and 
agreement by the parties that rate-based cost comparisons are 
insufficient to provide a true picture of the economies of the non-
foreign areas, which are remote and isolated from the rest of the 
country in many ways. This is just as true for salary costs as for 
living costs.''

OPM Response

    We conclude the fundamental premise of Caraballo is equivalent to 
its foundation. The Caraballo settlement is confined to the former 
cost-of-living allowance (COLA) program and doesn't apply to the GS 
locality pay program. The locality pay statute requires locality pay 
based on comparisons of GS and non-Federal pay for the same levels of 
work, 5 U.S.C. 5304, not on the Caraballo settlement, living costs, or 
a view of the ``true picture of the economies.''

Comment 2

    ``Without an adjustment to account for various conditions which are 
unique to such areas (including those described below), the living 
standards afforded by the locality pay rate will be lower than Congress 
intended.''

OPM Response

    We find that Congress did not prescribe a policy to address any 
particular living standard, did not authorize consideration of living 
costs in setting locality pay, and did not cite living standards in the 
locality pay statute. See 5 U.S.C. 5304. The locality pay statute 
authorizes locality pay to make General Schedule rates of pay 
``substantially equal (when considered in the aggregate) to the rates 
paid to non-Federal workers for the same levels of work in the same 
locality.'' 5 U.S.C. 5304. Adding separate adjustments above local 
labor market rates to account for various conditions which are unique 
to such areas isn't contemplated in the locality pay statute and would 
cause GS rates of pay to be higher than market rates, not 
``substantially equal when considered in the aggregate.'' See 5 U.S.C. 
5304.

Comment 3

    ``If, for administrative reasons, a non-foreign area is to be 
included in the locality pay area established for a broader region, 
then the two places should have an affinity of some kind.''
    and
    ``However, lumping a transoceanic non-foreign area together with 
Montana and Wyoming makes no sense at all.''
    and
    ``The choice made in this rule is the least costly for the 
Government, and

[[Page 32861]]

there does not appear to be any other basis for it.''

OPM Response

    We believe these locations do have an affinity. Based on available 
salary survey data, pay levels in these locations are low. Both OPM and 
the Federal Salary Council evaluated available BLS pay data for Guam, 
Puerto Rico, and the U.S. Virgin Islands and found the comparison of GS 
to non-Federal pay in those locations to be below the results for the 
Rest of U.S. locality pay area. In this way, Guam, Puerto Rico, and the 
U.S. Virgin Islands were treated exactly like a mainland U.S. location 
where survey results were below RUS--as the Federal Salary Council has 
recommended, they were included in the RUS locality pay area. Likewise, 
other locations that cannot be evaluated separately are also included 
in the RUS area, whether they are remote on the mainland or remote in 
the Pacific.

Comment 4

    ``An alternative choice of a locality pay area for the transoceanic 
non-foreign areas might be the new locality pay area which covers the 
Hawaiian Islands.''

OPM Response

    Pay survey findings indicate non-Federal pay levels in Honolulu are 
higher than those in Guam and the RUS area and thus warrant a separate 
locality pay area. Pay survey results in Guam indicate low non-Federal 
pay levels. There is nothing in the pay statute that requires the 
Government to pay more than warranted by the local labor market. See 5 
U.S.C. 5304.

Comment 5

    ``However, in light of the COLA program history, the Washington, 
D.C. area is a better choice than Hawaii as the locality pay area for 
other transoceanic non-foreign areas at the present time.''
    and
    ``The reason for this preference is that the Federal Salary Council 
has acknowledged the private salary data from both Alaska and Hawaii to 
be unsatisfactory in certain respects and has urged increased funding 
for survey enhancements in those areas.''
    and
    ``There is a wealth of statistical data comparing living costs 
between the non-foreign areas and Washington, DC, and this data can be 
used to correlate locality pay rates in the non-foreign areas 
(including Hawaii and Alaska) with the rate in Washington, D.C.''

OPM Response

    The COLA program history is not relevant to the administration of 
the locality pay program. The COLA statute predates locality pay by 42 
years and authorized payments in non-foreign areas made in 
consideration of living costs substantially higher than in the District 
of Columbia or conditions of environment which differ substantially 
from conditions in the continental United States and warrant payments 
as a recruitment incentive. See 5 U.S.C. 5304 and 5 U.S.C. 5941. 
Congress chose to phase out COLA and replace it with locality pay. 
Public Law 111-84, title XIX, subtitle B (October 28, 2009). Locality 
pay is based solely on pay comparisons for the same levels of work. 
Living costs and conditions of environment are not mentioned in the 
locality pay statute. 5 U.S.C. 5304.
    The Federal Salary Council did request BLS increase its NCS sample 
in Honolulu and reinstate its NCS survey in Anchorage. However, as 
described above, the Federal Salary Council and the Pay Agent are in 
the process of switching to a new survey methodology using survey data 
from the OES program. There is nothing wrong with the OES sample in any 
of the non-foreign areas surveyed, including Guam, Puerto Rico, and the 
U.S. Virgin Islands. The Council and the Pay Agent reviewed OES data 
for Guam, Puerto Rico, and the U.S. Virgin Islands, not NCS data.

Comment 6

    ``Unfortunately, OPM has provided inadequate notice of this rule, 
and inadequate opportunity for comments and further investigation with 
respect to this critical issue.''

OPM Response

    The comments did not explain what was inadequate about the notice 
or opportunity for comment. Interim final rules are permitted under the 
regulatory process if necessary to comply with statutory deadlines. OPM 
accepted and received comments on the interim rule through November 29, 
2010, including the attorney's comments. The NAREAA required that 
locality pay areas for COLA areas be established in time for locality 
payments in January 2011. Public Law 111-84, title XIX, subtitle B 
(October 28, 2009). OPM published the rule as an interim rule so that 
the rule could go into effect before January 2011. This timeline 
constraint was specifically cited in the interim rule. FR Vol. 75 No. 
189, page 60285, September 30, 2010.

Comment 7

    The attorney, and other commenters, are concerned that living cost 
surveys indicate living costs are high in the COLA areas while pay 
surveys indicate pay levels are not so high. He adds ``However, OPM has 
made no attempt to reconcile the results of the two approaches, much 
less to explain the diametrically opposite results they yield * * *''.

OPM Response

    The locality pay statute bases locality pay on comparisons of 
General Schedule and non-Federal pay for the same levels of work, 5 
U.S.C. 5304, not on living costs, at the heart of the Caraballo 
settlement. Living costs are one of many factors affecting pay levels 
in a location. The extent to which living costs affect or don't affect 
the supply and price of labor is reflected in area labor costs and 
salary survey results. Other relevant factors affecting labor costs 
include the number, types, and skill sets of workers in the area, the 
size and industry composition of employers, the degree of unionization, 
and a host of other factors. The locality pay statute does not provide 
for or require a means for OPM or the Pay Agent to reconcile 
differences between living costs and salary surveys. See 5 U.S.C. 5304.

Comment 8

    The attorney believes that ``Part of the explanation for the 
divergence in results between salary-cost surveys and living-cost 
surveys undoubtedly lies in the insularity of the transoceanic areas 
and the strong racial, ethnic, and cultural ties which bind together 
the residents of those places and inhibit out-migration in search of 
better paying jobs elsewhere.''

OPM Response

    The locality pay statute bases locality pay on comparisons of 
General Schedule (GS) and non-Federal pay for the same levels of work. 
5 U.S.C. 5304. It does not base locality pay on out-migration patterns 
or racial, ethnic, and cultural ties. 5 U.S.C. 5304.

Comment 9

    ``The locality pay system is not intended to allow the Government 
to take advantage of depressed conditions in a locality pay area but 
rather to increase salaries--and thus the performance and retention--of 
federal workers everywhere in the nation. Yet this rule will have the 
effect of dragging down the living standards of federal employees in 
the transoceanic non-foreign areas.''

[[Page 32862]]

OPM Response

    The statute bases locality pay on comparisons of General Schedule 
(GS) and non-Federal pay for the same levels of work in order to make 
GS and non-Federal pay substantially equal when considered in the 
aggregate. 5 U.S.C. 5304. It does not require adjusting survey results 
to compensate for ``depressed conditions'' whether such conditions are 
in the Pacific and attributable to distance from the mainland or ethnic 
factors, in Detroit and due to conditions in the auto industry, or in 
areas of the U.S. impacted by natural disasters. 5 U.S.C. 5304. 
Likewise, the locality pay statute does not guarantee any particular 
living standard. 5 U.S.C. 5304.

Comment 10

    The attorney believes ``* * * this rule is not only arbitrary, 
capricious, and an abuse of discretion under the Administrative 
Procedure Act, but it is also unlawfully discriminatory against racial 
and ethnic minorities which have disproportionately large presences * * 
* in the transoceanic areas * * *'' Other commenters made similar 
comments.

OPM Response

    Based on available data, non-Federal pay levels in these locations 
are low. Both OPM and the Federal Salary Council evaluated available 
BLS pay data for Guam, Puerto Rico, and the U.S. Virgin Islands and 
found the comparison of GS to non-Federal pay in those locations to be 
below the results for the Rest of U.S. locality pay area. In this way, 
Guam, Puerto Rico, and the U.S. Virgin Islands were treated exactly 
like a mainland location where survey results were below RUS. As the 
Federal Salary Council has recommended, they were included in the RUS 
locality pay area. Likewise, other locations that cannot be evaluated 
separately are also included in the RUS area, whether they are remote 
on the mainland or remote in the Pacific.

Impact and Implementation

    This rule affects rates of pay for about 44,100 civilian white-
collar employees in the States of Alaska and Hawaii, American Samoa, 
the Commonwealths of Puerto Rico and the Northern Mariana Islands, 
Guam, the U.S. Virgin Islands, and other U.S. possessions. Under the 
rule, approved GS locality pay rates are higher than in the RUS 
locality pay area for employees in Alaska and Hawaii. Federal civilian 
white-collar employees in the U.S. territories and possessions are 
covered by the RUS GS locality pay rate.

Clarification and Updates

    During the comment period, we noted that the definition of 
``Continental United States'' in section 531.602 and reference to 
continental U.S. in the definition of employee are no longer needed, so 
we are removing this out-of-date language. We are also taking this 
publication opportunity to update the locality pay caps in section 
531.606 to be consistent with current law.

Executive Order 13563 and Executive Order 12866

    The Office of Management and Budget has reviewed this rule in 
accordance with E.O. 13563 and 12866.

Paperwork Reduction Act

    This document does not contain proposed information collection 
requirements subject to the Paperwork Reduction Act of 1995, Public Law 
104-13.

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities because they 
will apply only to Federal agencies and employees.

List of Subjects in 5 CFR Part 531

    Government employees, Law enforcement officers, Wages.

U.S. Office of Personnel Management.
John Berry,
Director.
    Accordingly, OPM is adopting as a final rule, with minor changes, 
the interim rule published at 75 FR 60285 on September 30, 2010 and is 
amending 5 CFR part 531 as follows:

PART 531--PAY UNDER THE GENERAL SCHEDULE

0
1. The authority citation for part 531 continues to read as follows:

    Authority:  5 U.S.C. 5115, 5307, and 5338; sec. 4 of Public Law 
103-89, 107 Stat. 981; and E.O. 12748, 56 FR 4521, 3 CFR, 1991 
Comp., p. 316; Subpart B also issued under 5 U.S.C. 5303(g), 5305, 
5333, 5334(a) and (b), and 7701(b)(2); Subpart D also issued under 5 
U.S.C. 5335 and 7701(b)(2); Subpart E also issued under 5 U.S.C. 
5336; Subpart F also issued under 5 U.S.C. 5304 and 5305; E.O. 
12883, 58 FR 63281, 3 CFR, 1993 Comp., p. 682; and E.O. 13106, 63 FR 
68151, 3 CFR, 1998 Comp., p. 224.

Subpart F--Locality-Based Comparability Payments

0
2. In Sec.  531.602, remove the definition of Continental United States 
and revise paragraph (1) in the definition of employee. The revision 
reads as follows:


Sec.  531.602  Definitions.

* * * * *
    Employee * * *
    (1) An employee in a position to which 5 U.S.C. chapter 53, 
subchapter III, applies, including a GM employee, and whose official 
worksite is located in a locality pay area; and
* * * * *
0
3. In Sec.  531.603, paragraph (b) is revised to read as follows:


Sec.  531.603  Locality pay areas.

* * * * *
    (b) The following are locality pay areas for the purposes of this 
subpart:
    (1) Alaska--consisting of the State of Alaska;
    (2) Atlanta-Sandy Springs-Gainesville, GA-AL--consisting of the 
Atlanta-Sandy Springs-Gainesville, GA-AL CSA;
    (3) Boston-Worcester-Manchester, MA-NH-RI-ME--consisting of the 
Boston-Worcester-Manchester, MA-RI-NH CSA, plus Barnstable County, MA, 
and Berwick, Eliot, Kittery, South Berwick, and York towns in York 
County, ME;
    (4) Buffalo-Niagara-Cattaraugus, NY--consisting of the Buffalo-
Niagara-Cattaraugus, NY CSA;
    (5) Chicago-Naperville-Michigan City, IL-IN-WI--consisting of the 
Chicago-Naperville-Michigan City, IL-IN-WI CSA;
    (6) Cincinnati-Middletown-Wilmington, OH-KY-IN--consisting of the 
Cincinnati-Middletown-Wilmington, OH-KY-IN CSA;
    (7) Cleveland-Akron-Elyria, OH--consisting of the Cleveland-Akron-
Elyria, OH CSA;
    (8) Columbus-Marion-Chillicothe, OH--consisting of the Columbus-
Marion-Chillicothe, OH CSA;
    (9) Dallas-Fort Worth, TX--consisting of the Dallas-Fort Worth, TX 
CSA;
    (10) Dayton-Springfield-Greenville, OH--consisting of the Dayton-
Springfield-Greenville, OH CSA;
    (11) Denver-Aurora-Boulder, CO--consisting of the Denver-Aurora-
Boulder, CO CSA, plus the Ft. Collins-Loveland, CO MSA;
    (12) Detroit-Warren-Flint, MI--consisting of the Detroit-Warren-
Flint, MI CSA, plus Lenawee County, MI;
    (13) Hartford-West Hartford-Willimantic, CT-MA--consisting of the 
Hartford-West Hartford-Willimantic, CT CSA, plus the Springfield, MA 
MSA and New London County, CT;
    (14) Hawaii--consisting of the State of Hawaii;
    (15) Houston-Baytown-Huntsville, TX--consisting of the Houston-
Baytown-Huntsville, TX CSA;
    (16) Huntsville-Decatur, AL--consisting of the Huntsville-Decatur, 
AL CSA;

[[Page 32863]]

    (17) Indianapolis-Anderson-Columbus, IN--consisting of the 
Indianapolis-Anderson-Columbus, IN CSA, plus Grant County, IN;
    (18) Los Angeles-Long Beach-Riverside, CA--consisting of the Los 
Angeles-Long Beach-Riverside, CA CSA, plus the Santa Barbara-Santa 
Maria-Goleta, CA MSA and all of Edwards Air Force Base, CA;
    (19) Miami-Fort Lauderdale-Pompano Beach, FL--consisting of the 
Miami-Fort Lauderdale-Pompano Beach, FL MSA, plus Monroe County, FL;
    (20) Milwaukee-Racine-Waukesha, WI--consisting of the Milwaukee-
Racine-Waukesha, WI CSA;
    (21) Minneapolis-St. Paul-St. Cloud, MN-WI--consisting of the 
Minneapolis-St. Paul-St. Cloud, MN-WI CSA;
    (22) New York-Newark-Bridgeport, NY-NJ-CT-PA--consisting of the New 
York-Newark-Bridgeport, NY-NJ-CT-PA CSA, plus Monroe County, PA, Warren 
County, NJ, and all of Joint Base McGuire-Dix-Lakehurst;
    (23) Philadelphia-Camden-Vineland, PA-NJ-DE-MD--consisting of the 
Philadelphia-Camden-Vineland, PA-NJ-DE-MD CSA excluding Joint Base 
McGuire-Dix-Lakehurst, plus Kent County, DE, Atlantic County, NJ, and 
Cape May County, NJ;
    (24) Phoenix-Mesa-Scottsdale, AZ--consisting of the Phoenix-Mesa-
Scottsdale, AZ MSA;
    (25) Pittsburgh-New Castle, PA--consisting of the Pittsburgh-New 
Castle, PA CSA;
    (26) Portland-Vancouver-Hillsboro, OR-WA--consisting of the 
Portland-Vancouver-Hillsboro, OR-WA MSA, plus Marion County, OR, and 
Polk County, OR;
    (27) Raleigh-Durham-Cary, NC--consisting of the Raleigh-Durham-
Cary, NC CSA, plus the Fayetteville, NC MSA, the Goldsboro, NC MSA, and 
the Federal Correctional Complex Butner, NC;
    (28) Richmond, VA--consisting of the Richmond, VA MSA;
    (29) Sacramento--Arden-Arcade--Yuba City, CA-NV--consisting of the 
Sacramento--Arden-Arcade--Yuba City, CA-NV CSA, plus Carson City, NV;
    (30) San Diego-Carlsbad-San Marcos, CA--consisting of the San 
Diego-Carlsbad-San Marcos, CA MSA;
    (31) San Jose-San Francisco-Oakland, CA--consisting of the San 
Jose-San Francisco-Oakland, CA CSA, plus the Salinas, CA MSA and San 
Joaquin County, CA;
    (32) Seattle-Tacoma-Olympia, WA--consisting of the Seattle-Tacoma-
Olympia, WA CSA, plus Whatcom County, WA;
    (33) Washington-Baltimore-Northern Virginia, DC-MD-VA-WV-PA--
consisting of the Washington-Baltimore-Northern Virginia, DC-MD-VA-WV 
CSA, plus the Hagerstown-Martinsburg, MD-WV MSA, the York-Hanover-
Gettysburg, PA CSA, and King George County, VA; and
    (34) Rest of U.S.--consisting of those portions of the United 
States and its territories and possessions as listed in 5 CFR 591.205 
not located within another locality pay area.
0
4. In Sec.  531.606--
0
a. Revise paragraph (b)(1);
0
b. Redesignate paragraph (b)(2) and (b)(3) as (b)(3) and (b)(4), 
respectively;
0
c. Add a new paragraph (b)(2); and
0
d. Revise newly designated paragraph (b)(4).
    The revisions and addition read as follows:


 531.606  Maximum limits on locality rates.

    (a) * * *
    (b)(1) A locality rate for an employee in a category of positions 
described in 5 U.S.C. 5304(h)(1)(A) and 5304(h)(1)(B) may not exceed 
the rate for level III of the Executive Schedule.
    (2) A locality rate for an employee in a category of positions 
described in 5 U.S.C. 5304(h)(1)(C) may not exceed--
    (i) The rate for level III of the Executive Schedule, when the 
positions are not covered by an appraisal system certified under 5 
U.S.C. 5307(d); or
    (ii) The rate for level II of the Executive Schedule, when the 
positions are covered by an appraisal system certified under 5 U.S.C. 
5307(d).
* * * * *
    (4) If initial application of paragraph (b)(3) of this section 
otherwise would reduce an employee's existing locality rate, the 
employee's locality rate is capped at the higher of--
    (i) The amount of the employee's locality rate on the day before 
paragraph (b)(3) of this section was initially applied; or
    (ii) The rate for level IV of the Executive Schedule.
* * * * *
[FR Doc. 2011-13993 Filed 6-6-11; 8:45 am]
BILLING CODE 6325-39-P