How does OPM establish COLA areas?

(a) OPM designates, within nonforeign areas, areas where agencies pay employees a COLA by virtue of living costs that are substantially higher than those in the Washington, DC, area. In establishing the boundaries of COLA areas, OPM considers— (1) The existence of a well-defined economic community, (2) The availability of consumer goods and services, (3) The concentration of Federal employees covered by this subpart, and (4) Unique circumstances related to a specific location. (b) If a department or agency wants OPM to consider establishing or revising the definition of a COLA area, the head of the department or agency or his or her designee must submit a request in writing to OPM.