[Federal Register: November 9, 2001 (Volume 66, Number 218)]
[Rules and Regulations]
[Page 56751-56752]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09no01-18]
[[Page 56751]]
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OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 591
RIN 3206-AJ40
Cost-of-Living Allowances (Nonforeign Areas); Commissary/Exchange
Rates; Survey Frequency; Gradual Reductions
AGENCY: Office of Personnel Management.
ACTION: Interim rule.
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SUMMARY: The Office of Personnel Management (OPM) is issuing interim
regulations to implement recent amendments to Executive Order 10000
regarding nonforeign area cost-of-living allowances (COLAs). These
regulations eliminate the separate COLA rate paid to Federal employees
with commissary and exchange privileges; allow OPM to conduct COLA
surveys less frequently; and permit OPM to reduce COLA rates gradually
regardless of the cause of the reduction. These changes will accomplish
several of the provisions agreed upon under a recent settlement of
litigation concerning nonforeign area COLAs.
DATES: Effective date: November 9, 2001. Implementation date: First day
of the first pay period beginning on or after November 9, 2001. Comment
date: Submit comments on or before January 8, 2002.
ADDRESSES: Send or deliver 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:
COLA@opm.gov.
FOR FURTHER INFORMATION CONTACT: Donald L. Paquin, (202) 606-2838; fax:
(202) 606-4264; or e-mail: COLA@opm.gov.
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. 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.
Executive Order 10000 delegates to OPM the authority to administer
the nonforeign area COLA program and prescribes certain operational
features of the program. On April 5, 2001, the President signed E.O.
13207 (published April 9, 2001, at 66 FR 18399) to amend E.O. 10000 to
conform to agreements made in the Caraballo settlement. Caraballo was a
class-action lawsuit in which the plaintiffs contested the methodology
OPM used to determine COLA rates. The amendments to E.O. 10000 (1)
remove the requirement that OPM establish separate COLA rates for
employees who have commissary and exchange privileges; (2) allow OPM to
conduct COLA surveys less frequently (e.g., once every 3 years in each
of the allowance areas instead of annually); and (3) allow OPM to
reduce COLA rates gradually regardless of the cause of the reduction.
We are issuing interim regulations to implement the amendments to
E.O. 10000. Pursuant to the Caraballo settlement, we plan to adopt
several other regulatory changes. We have set out these regulatory
changes in proposed regulations published separately in this issue of
the Federal Register.
Commissary/Exchange COLA Rate
Prior to the recent amendments, E.O. 10000 required that OPM offset
COLAs when quarters or purchasing privileges are furnished at a cost
substantially lower than local prevailing costs. The rent for quarters
is set at local prevailing rates in accordance with Office of
Management and Budget Circular A-47. For over a decade, OPM has not
established a lower COLA rate for employees in Government quarters.
However, OPM established a separate rate category for employees who
received commissary and exchange privileges as a result of their
Federal civilian employment.
As permitted by the Department of Defense, some agencies offer
commissary and exchange privileges as a recruitment incentive to
encourage employees to accept positions in the Guam/CNMI allowance
area. The requirement to take into consideration such privileges and
set a separate and lower COLA rate for these employees effectively
undermined the recruitment incentive. The removal of this requirement
in E.O. 10000 improves the effectiveness of the commissary and exchange
privileges recruitment incentive.
Therefore, we are eliminating from OPM's regulations the separate
rate category applied to employees who receive commissary and exchange
privileges. This change will currently affect only civilian employees
in the Guam/CNMI allowance area who receive the 22.5 percent
Commissary/Exchange COLA rate. Effective with these regulations, all
Federal civilian employees in Guam will receive the 25 percent COLA
rate currently set for employees without commissary and exchange
privileges.
Survey Frequency
The amendments to E.O. 10000 removed the requirement for annual
surveys; therefore, we are making a corresponding change in the COLA
regulations. This change will permit the Government to survey allowance
areas once every 3 years on a rotational basis.
Gradual Reductions
Prior to the recent amendments, E.O. 10000 prohibited OPM from
implementing a COLA rate reduction on a gradual basis unless the
reduction was because of program or methodology revisions. The
amendment to E.O. 10000 removed this condition, allowing OPM to reduce
COLA rates on a gradual basis whether the reduction is due to a change
in the methodology or a relative change in living costs. This amendment
conforms to one of the terms of the Caraballo settlement, and we are
making a corresponding change in the COLA regulations.
Administrative Procedure Act
As provided under 5 U.S.C. 553(b)(3)(B) and (d)(3), OPM finds that
good cause exists to waive the publication of proposed rulemaking and
the 30-day delay in the effective date of this regulation. These
changes conform OPM regulations to recent amendments to E.O. 10000
without imposing additional requirements. Moreover, the Government and
employee representatives cooperated fully in developing and
recommending the changes, which were incorporated into the stipulation
for settlement in Caraballo, et al. v. United States. Therefore, we
believe these changes will benefit both the Government and the affected
employees and that it is in the public interest to implement the
changes immediately.
[[Page 56752]]
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 will not have a significant
economic impact on a substantial number of small entities because they
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.
Kay Coles James,
Director.
Accordingly, the Office of Personnel Management amends 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 part 591 continues to
read as follows:
Authority: 5 U.S.C. 5941; E.O. 10000, 3 CFR, 1943-1948 Comp., p.
792; E.O. 12510, 3 CFR, 1985 Comp., p. 338.
2. In Sec. 591.205, paragraph (a) introductory text and paragraph
(b)(1)(i) are revised to read as follows:
Sec. 591.205 Comparative cost index.
(a) OPM calculates allowance rates for each area by comparing costs
of four categories of expenses in the area to those in the Washington,
DC, area. The four categories of expenses are:
* * * * *
(b) * * *
(1) * * *
(i) Goods and services surveyed. The types and amounts of
consumption goods and services to be surveyed at each income level will
be derived from appropriate consumer expenditure surveys. Whenever
possible, exact brands and models are priced in each location. Price
data are obtained from appropriate retail outlets in each area.
Individual items are grouped into categories according to common
functions or uses.
* * * * *
Sec. 591.207 [Removed and Reserved]
3. Section 591.207 is removed and reserved.
4. Section 591.211 is revised to read as follows:
Sec. 591.211 Periodic review.
In accordance with Executive Order 10000, OPM reviews from time to
time the places designated, the rates fixed, and the regulations in
this subpart that are prescribed for payment of allowances and
differentials. This review is to make warranted changes to ensure that
payments under this subpart will continue only during the continuation
of conditions justifying payment of allowances and differentials and
will not in any instance exceed the amount justified. However, the rate
of such additional compensation may be reduced gradually.
5. Appendix A of subpart B is revised to read as follows:
Appendix A of Subpart B--Places and Rates at Which Allowances Shall
Be 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)
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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
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[FR Doc. 01-28057 Filed 11-8-01; 8:45 am]
BILLING CODE 6325-39-P