5 C.F.R. § 591.206 – 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. (1) The existence of a well-defined economic community,
2. (2) The availability of consumer goods and services,
3. (3) The concentration of Federal employees covered by this subpart, and
4. (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.