[Federal Register Volume 83, Number 131 (Monday, July 9, 2018)]
[Proposed Rules]
[Pages 31694-31697]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14542]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 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.
 
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 

  Federal Register / Vol. 83, No. 131 / Monday, July 9, 2018 / Proposed 
Rules  

[[Page 31694]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 531

RIN 3206-AN64


General Schedule Locality Pay Areas

AGENCY: Office of Personnel Management.

ACTION: Proposed rule with request for comments.

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SUMMARY: On behalf of the President's Pay Agent, the Office of 
Personnel Management is issuing proposed regulations to establish four 
new General Schedule locality pay areas, make certain changes to the 
definitions of existing locality pay areas, and make minor clarifying 
changes to the names of two locality pay areas. The proposed changes in 
locality pay area definitions would be applicable on the first day of 
the first applicable pay period beginning on or after January 1, 2019, 
subject to issuance of final regulations. Locality pay rates for the 
four new locality pay areas would be set by the President after the new 
locality pay areas would be established by regulation.

DATES: We must receive comments on or before August 8, 2018.

ADDRESSES: You may submit comments, identified by RIN 3206-AN64, by 
either of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments.
    Email: [email protected]. Include ``RIN 3206-AN64'' in the 
subject line of the message.

FOR FURTHER INFORMATION CONTACT: Joe Ratcliffe by email at [email protected] or by telephone at (202) 606-2838.

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. 
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 (OMB), and the Director of the Office 
of Personnel Management (OPM)) to determine locality pay areas. The 
boundaries of locality pay areas are based on appropriate factors, 
which may include local labor market patterns, commuting patterns, and 
the practices of other employers. The Pay Agent considers the views and 
recommendations of the Federal Salary 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 administration of the 
locality pay program, including the geographic boundaries of locality 
pay areas. (The Federal Salary Council's recommendations are posted on 
the OPM website at https://www.opm.gov/policy-data-oversight/pay-leave/pay-systems/general-schedule/#url=Federal-Salary-Council.) The 
establishment or modification of pay area boundaries conforms to the 
notice and comment provisions of the Administrative Procedure Act (5 
U.S.C. 553).
    This proposal provides notice and requests comments on proposed 
regulations to implement the Pay Agent's plan to establish four new 
locality pay areas; to establish McKinley County, NM, as an area of 
application to the Albuquerque-Santa Fe-Las Vegas, NM, locality pay 
area; and to establish San Luis Obispo County, CA, as an area of 
application to the Los Angeles-Long Beach, CA, locality pay area. 
(Annual Pay Agent reports on locality pay are posted on the OPM website 
at https://www.opm.gov/policy-data-oversight/pay-leave/pay-systems/general-schedule/#url=Pay-Agent-Reports.) As further discussed below, 
those changes were tentatively approved, pending appropriate 
rulemaking, in recent annual reports of the President's Pay Agent. In 
addition, the proposed regulations would link locality pay area 
definitions to metropolitan statistical areas (MSAs) and combined 
statistical areas (CSAs) defined in OMB Bulletin 18-03 and would also 
make minor clarifying changes to the names of two locality pay areas, 
the geographic boundaries of which would not change.

Establishing Four New Locality Pay Areas

    Locality pay is set by comparing GS and non-Federal pay rates for 
the same levels of work in each locality pay area. Non-Federal salary 
survey data used to set locality pay rates are collected by the Bureau 
of Labor Statistics (BLS). BLS uses a method that permits Occupational 
Employment Statistics (OES) data to be used for locality pay. OES data 
are available for MSAs and CSAs throughout the Country and permit 
evaluation of salary levels in many more locations than could be 
covered under the prior National Compensation Survey alone.
    The Federal Salary Council has been monitoring pay comparisons of 
GS and non-Federal pay in ``Rest of U.S.'' MSAs and CSAs with 2,500 or 
more GS employees. Based on its review, the Federal Salary Council has 
recommended new locality pay areas be established for four metropolitan 
areas with pay gaps averaging more than 10 percentage points above that 
for the ``Rest of U.S.'' locality pay area over an extended period. The 
President's Pay Agent has agreed to issue proposed regulations that 
would establish the four new locality pay areas by modifying 5 CFR 
531.603(b) accordingly. The four new locality pay areas proposed are 
Birmingham-Hoover-Talladega, AL; Burlington-South Burlington, VT; San 
Antonio-New Braunfels-Pearsall, TX; and Virginia Beach-Norfolk, VA-NC. 
(In its December 2016 annual report on locality pay, the Pay Agent 
announced its plan to establish Burlington, VT, and Virginia Beach, VA, 
as new locality pay areas. In its December 2017 annual report on 
locality pay, the Pay Agent announced its plan to establish Birmingham, 
AL, and San Antonio, TX, as new locality pay areas.) Locality pay rates 
for the four new locality pay areas would be set by the President at a 
later date after they would be established by regulation.

Criteria for Areas of Application

    Locality pay areas consist of (1) the MSA or CSA comprising the 
basic locality pay area and, where criteria recommended by the Federal 
Salary Council and approved by the Pay Agent are met, (2) areas of 
application. Areas of application are locations that are adjacent to 
the basic locality pay area

[[Page 31695]]

and meet approved criteria for inclusion in the locality pay area.
    The Pay Agent's current criteria for evaluating locations adjacent 
to a basic locality pay area for possible inclusion in the locality pay 
area as areas of application are as follows: For adjacent CSAs and 
adjacent multi-county MSAs the criteria are 1,500 or more GS employees 
and an employment interchange rate of at least 7.5 percent. For 
adjacent single counties, the criteria are 400 or more GS employees and 
an employment interchange rate of at least 7.5 percent. The employment 
interchange rate is defined as the sum of the percentage of employed 
residents of the area under consideration who work in the basic 
locality pay area and the percentage of the employment in the area 
under consideration that is accounted for by workers who reside in the 
basic locality pay area. (The employment interchange rate is calculated 
by including all workers in assessed locations, not just Federal 
employees.)
    The Pay Agent also has criteria for evaluating Federal facilities 
that cross county lines into a separate locality pay area. To be 
included in an adjacent locality pay area, the whole facility must have 
at least 500 GS employees, with the majority of those employees in the 
higher-paying locality pay area, or that portion of a Federal facility 
outside of a higher-paying locality pay area must have at least 750 GS 
employees, the duty stations of the majority of those employees must be 
within 10 miles of the separate locality pay area, and a significant 
number of those employees must commute to work from the higher-paying 
locality pay area.

New Commuting Patterns Data

    In its December 2016 recommendations, the Federal Salary Council 
recommended using recently updated commuting patterns data in the 
locality pay program--i.e., commuting patterns data collected as part 
of the American Community Survey from 2009 to 2013. In its December 
2017 report, the Pay Agent agreed that it would consider using those 
commuting patterns data. The Pay Agent believes it would be appropriate 
to use the updated commuting patterns data for evaluating potential 
areas of application. Areas of application included in the locality pay 
area definitions in this proposed rule, at 5 CFR 531.603(b), reflect 
use of the updated commuting patterns data for evaluating potential 
areas of application.
    Using the updated commuting patterns data and applying current 
criteria for evaluating ``Rest of U.S.'' locations as potential areas 
of application result in the addition of one location to an existing 
locality pay area--McKinley County, NM, would be included in the 
Albuquerque-Santa Fe-Las Vegas, NM, locality pay area. Regarding the 
four new locality pay areas proposed, using the updated commuting 
patterns data and applying current criteria for evaluating ``Rest of 
U.S.'' locations as potential areas of application result in the 
addition of one location to a proposed new locality pay area--Calhoun 
County, AL, would be included in the proposed Birmingham-Hoover-
Talladega, AL, locality pay area.

San Luis Obispo County, CA

    In the Federal Salary Council's December 2016 recommendations, the 
Council made a special recommendation for San Luis Obispo County, CA. 
Because practically all of San Luis Obispo County's land boundary is 
bordered by the Los Angeles-Long Beach, CA, and San Jose-San Francisco-
Oakland, CA, locality pay areas, the Council recommended that the 
county be treated as have other ``Rest of U.S.'' locations entirely 
bordered by separate locality pay areas--i.e., added to the separate 
locality pay area with which it has the most commuting. Specifically, 
the Council recommended that San Luis Obispo County be added to the Los 
Angeles-Long Beach, CA, locality pay area.
    As explained in its December 2017 report, the Pay Agent views the 
situation regarding San Luis Obispo County as a geographic anomaly. 
Only a very small amount of the geographic boundary of San Luis Obispo 
County, CA, in a remote corner of the county, is not adjacent to the 
Los Angeles-Long Beach, CA, or San Jose-San Francisco-Oakland, CA, 
locality pay areas. Because practically all of San Luis Obispo County's 
land boundary is bordered by the Los Angeles-Long Beach, CA, and San 
Jose-San Francisco-Oakland, CA, locality pay areas, the Pay Agent 
agrees with the Council that the county should be treated as ``Rest of 
U.S.'' locations entirely bordered by separate locality pay areas have 
been treated. Accordingly, the Pay Agent proposes adding San Luis 
Obispo County to the Los Angeles-Long Beach, CA, locality pay area as 
an area of application.

Linking Locality Pay Area Boundaries to OMB-Defined Metropolitan Areas

    The Pay Agent has used statistical areas defined by OMB as a basis 
for locality pay area boundaries since locality pay began in 1994. Such 
OMB-defined statistical areas are called ``metropolitan statistical 
areas'' (MSAs) and ``combined statistical areas'' (CSAs). On April 10, 
2018, OMB issued a minor update to the definitions of MSAs and CSAs in 
OMB Bulletin 18-03. The proposed regulations would link the definitions 
of locality pay areas to the most current OMB definitions of MSAs and 
CSAs--i.e., those in OMB Bulletin 18-03. The geographic boundaries of 
locality pay areas would not change automatically if OMB issues a new 
Bulletin to change the definitions of any MSAs or CSAs serving as the 
basis of the geographic boundaries of locality pay areas. The Pay Agent 
would instead assess what the impact of a future bulletin would be on 
locality pay areas before deciding whether to use the new statistical 
area definitions.

Changing the Names of Two Locality Pay Areas for Clarification

    The Pay Agent proposes changing the names of two locality pay areas 
for clarification. The State abbreviation ``CT'' would be removed from 
the name of the ``Boston-Worcester-Providence, MA-RI-NH-CT-ME'' 
locality pay area to clarify that no locations in Connecticut are 
included in that locality pay area, and the State abbreviation ``MA'' 
would be added to the name of the ``Albany-Schenectady, NY'' locality 
pay area to clarify that Berkshire County, MA, is included in that 
locality pay area. These proposed name changes would not change the 
geographic boundaries of the two locality pay areas affected.

Impact and Implementation

    The proposal to establish 4 new locality pay areas would impact 
about 62,000 GS employees. Implementing that proposal would not 
automatically change locality pay rates now applicable in those areas. 
When locality pay percentages are adjusted, past practice has been to 
allocate a percent of the total GS payroll for locality pay raises and 
to have the overall dollar cost for such pay raises be the same, 
regardless of the number of locality pay areas. If a percent of the 
total GS payroll is allocated for locality pay increases, the addition 
of new areas results in a somewhat smaller amount to allocate for 
locality pay increases in existing areas. Implementing higher locality 
pay rates in the four new locality pay areas could thus result in 
relatively lower pay increases for employees in existing locality pay 
areas than they would otherwise receive.
    Establishing McKinley County, NM, as an area of application to the 
Albuquerque-Santa Fe-Las Vegas, NM,

[[Page 31696]]

locality pay area would impact about 1,600 GS employees. Establishing 
San Luis Obispo County, CA, as an area of application to the Los 
Angeles-Long Beach, CA, locality pay area would impact about 100 GS 
employees.
    Using the definitions of MSAs and CSAs in OMB Bulletin 18-03 as the 
basis for locality pay area boundaries would have no effect on the 
definitions of locality pay areas or on GS employees.
    The changes proposed for the names of the Boston-Worcester-
Providence, MA-RI-NH-CT-ME and Albany-Schenectady, NY, locality pay 
areas would have no impact on GS employees because the geographic 
boundaries of the two locality pay areas affected would remain the 
same.

Executive Order 13563 and Executive Order 12866

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

Executive Order 13771

    This proposed rule is not subject to the requirements of E.O. 13771 
(82 FR 9339, February 3, 2017) because it is expected to be related to 
agency organization, management, or personnel.
    Due to the narrow scope of this proposed rule, affecting 
approximately 63,700 GS employees, OPM does not anticipate this 
proposed rule would substantially impact local economies or have a 
large ripple effect in local labor markets. However, studies do suggest 
increasing wages can raise the wages of other workers when employers 
need to compete for personnel. Future locality pay rulemaking may 
impact higher volumes of employees in geographical areas and could rise 
to the level of impacting markets. OPM will address the implications of 
such impacts in E.O. 13771 designations for future rules as needed.

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 apply only to Federal agencies and employees.

List of Subjects in 5 CFR Part 531

    Government employees, Law enforcement officers, Wages.

    Office of Personnel Management.
Jeff T.H. Pon,
Director.

    Accordingly, OPM proposes to amend 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, 5305, and 5941(a), 
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, the definitions of CSA and MSA are revised to read 
as follows:


Sec.  531.602  Definitions.

* * * * *
    CSA means the geographic scope of a Combined Statistical Area, as 
defined by the Office of Management and Budget (OMB) in OMB Bulletin 
No. 18-03.
* * * * *
    MSA means the geographic scope of a Metropolitan Statistical Area, 
as defined by the Office of Management and Budget (OMB) in OMB Bulletin 
No. 18-03.
* * * * *
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) Albany-Schenectady, NY-MA--consisting of the Albany-
Schenectady, NY CSA and also including Berkshire County, MA;
    (3) Albuquerque-Santa Fe-Las Vegas, NM--consisting of the 
Albuquerque-Santa Fe-Las Vegas, NM CSA and also including McKinley 
County, NM;
    (4) Atlanta--Athens-Clarke County--Sandy Springs, GA-AL--consisting 
of the Atlanta--Athens-Clarke County--Sandy Springs, GA CSA and also 
including Chambers County, AL;
    (5) Austin-Round Rock, TX--consisting of the Austin-Round Rock, TX 
MSA;
    (6) Birmingham-Hoover-Talladega, AL--consisting of the Birmingham-
Hoover-Talladega, AL CSA and also including Calhoun County, AL;
    (7) Boston-Worcester-Providence, MA-RI-NH-ME--consisting of the 
Boston-Worcester-Providence, MA-RI-NH-CT CSA, except for Windham 
County, CT, and also including Androscoggin County, ME, Cumberland 
County, ME, Sagadahoc County, ME, and York County, ME;
    (8) Buffalo-Cheektowaga, NY--consisting of the Buffalo-Cheektowaga, 
NY CSA;
    (9) Burlington-South Burlington, VT--consisting of the Burlington-
South Burlington, VT MSA;
    (10) Charlotte-Concord, NC-SC--consisting of the Charlotte-Concord, 
NC-SC CSA;
    (11) Chicago-Naperville, IL-IN-WI--consisting of the Chicago-
Naperville, IL-IN-WI CSA;
    (12) Cincinnati-Wilmington-Maysville, OH-KY-IN--consisting of the 
Cincinnati-Wilmington-Maysville, OH-KY-IN CSA and also including 
Franklin County, IN;
    (13) Cleveland-Akron-Canton, OH--consisting of the Cleveland-Akron-
Canton, OH CSA and also including Harrison County, OH;
    (14) Colorado Springs, CO--consisting of the Colorado Springs, CO 
MSA and also including Fremont County, CO, and Pueblo County, CO;
    (15) Columbus-Marion-Zanesville, OH--consisting of the Columbus-
Marion-Zanesville, OH CSA;
    (16) Dallas-Fort Worth, TX-OK--consisting of the Dallas-Fort Worth, 
TX-OK CSA and also including Delta County, TX;
    (17) Davenport-Moline, IA-IL--consisting of the Davenport-Moline, 
IA-IL CSA;
    (18) Dayton-Springfield-Sidney, OH--consisting of the Dayton-
Springfield-Sidney, OH CSA and also including Preble County, OH;
    (19) Denver-Aurora, CO--consisting of the Denver-Aurora, CO CSA and 
also including Larimer County, CO;
    (20) Detroit-Warren-Ann Arbor, MI--consisting of the Detroit-
Warren-Ann Arbor, MI CSA;
    (21) Harrisburg-Lebanon, PA--consisting of the Harrisburg-York-
Lebanon, PA CSA, except for Adams County, PA, and York County, PA, and 
also including Lancaster County, PA;
    (22) Hartford-West Hartford, CT-MA--consisting of the Hartford-West 
Hartford, CT CSA and also including Windham County, CT, Franklin 
County, MA, Hampden County, MA, and Hampshire County, MA;
    (23) Hawaii--consisting of the State of Hawaii;
    (24) Houston-The Woodlands, TX--consisting of the Houston-The 
Woodlands, TX CSA and also including San Jacinto County, TX;
    (25) Huntsville-Decatur-Albertville, AL--consisting of the 
Huntsville-Decatur-Albertville, AL CSA;

[[Page 31697]]

    (26) Indianapolis-Carmel-Muncie, IN--consisting of the 
Indianapolis-Carmel-Muncie, IN CSA and also including Grant County, IN;
    (27) Kansas City-Overland Park-Kansas City, MO-KS--consisting of 
the Kansas City-Overland Park-Kansas City, MO-KS CSA and also including 
Jackson County, KS, Jefferson County, KS, Osage County, KS, Shawnee 
County, KS, and Wabaunsee County, KS;
    (28) Laredo, TX--consisting of the Laredo, TX MSA;
    (29) Las Vegas-Henderson, NV-AZ--consisting of the Las Vegas-
Henderson, NV-AZ CSA;
    (30) Los Angeles-Long Beach, CA--consisting of the Los Angeles-Long 
Beach, CA CSA and also including Kern County, CA, San Luis Obispo 
County, CA, and Santa Barbara County, CA;
    (31) Miami-Fort Lauderdale-Port St. Lucie, FL--consisting of the 
Miami-Fort Lauderdale-Port St. Lucie, FL CSA and also including Monroe 
County, FL;
    (32) Milwaukee-Racine-Waukesha, WI--consisting of the Milwaukee-
Racine-Waukesha, WI CSA;
    (33) Minneapolis-St. Paul, MN-WI--consisting of the Minneapolis-St. 
Paul, MN-WI CSA;
    (34) New York-Newark, NY-NJ-CT-PA--consisting of the New York-
Newark, NY-NJ-CT-PA CSA and also including all of Joint Base McGuire-
Dix-Lakehurst;
    (35) Palm Bay-Melbourne-Titusville, FL--consisting of the Palm Bay-
Melbourne-Titusville, FL MSA;
    (36) Philadelphia-Reading-Camden, PA-NJ-DE-MD--consisting of the 
Philadelphia-Reading-Camden, PA-NJ-DE-MD CSA, except for Joint Base 
McGuire-Dix-Lakehurst;
    (37) Phoenix-Mesa-Scottsdale, AZ--consisting of the Phoenix-Mesa-
Scottsdale, AZ MSA;
    (38) Pittsburgh-New Castle-Weirton, PA-OH-WV--consisting of the 
Pittsburgh-New Castle-Weirton, PA-OH-WV CSA;
    (39) Portland-Vancouver-Salem, OR-WA--consisting of the Portland-
Vancouver-Salem, OR-WA CSA;
    (40) Raleigh-Durham-Chapel Hill, NC--consisting of the Raleigh-
Durham-Chapel Hill, NC CSA and also including Cumberland County, NC, 
Hoke County, NC, Robeson County, NC, Scotland County, NC, and Wayne 
County, NC;
    (41) Richmond, VA--consisting of the Richmond, VA MSA and also 
including Cumberland County, VA, King and Queen County, VA, and Louisa 
County, VA;
    (42) Sacramento-Roseville, CA-NV--consisting of the Sacramento-
Roseville, CA CSA and also including Carson City, NV, and Douglas 
County, NV;
    (43) San Antonio-New Braunfels-Pearsall, TX--consisting of the San 
Antonio-New Braunfels-Pearsall, TX CSA;
    (44) San Diego-Carlsbad, CA--consisting of the San Diego-Carlsbad, 
CA MSA;
    (45) San Jose-San Francisco-Oakland, CA--consisting of the San 
Jose-San Francisco-Oakland, CA CSA and also including Monterey County, 
CA;
    (46) Seattle-Tacoma, WA--consisting of the Seattle-Tacoma, WA CSA 
and also including Whatcom County, WA;
    (47) St. Louis-St. Charles-Farmington, MO-IL--consisting of the St. 
Louis-St. Charles-Farmington, MO-IL CSA;
    (48) Tucson-Nogales, AZ--consisting of the Tucson-Nogales, AZ CSA 
and also including Cochise County, AZ;
    (49) Virginia Beach-Norfolk, VA-NC--consisting of the Virginia 
Beach-Norfolk, VA-NC CSA;
    (50) Washington-Baltimore-Arlington, DC-MD-VA-WV-PA--consisting of 
the Washington-Baltimore-Arlington, DC-MD-VA-WV-PA CSA and also 
including Kent County, MD, Adams County, PA, York County, PA, King 
George County, VA, and Morgan County, WV; and
    (51) 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.

[FR Doc. 2018-14542 Filed 7-6-18; 8:45 am]
 BILLING CODE 6325-39-P