under subsection (h)(1)(C) covered by appraisal systems 
certified under section 5307(d).’’; and 
(3) in subsection (h)(1)— 
(A) in subparagraph (B), by striking 
‘‘and’’ after the semicolon; 
(B) by redesignating subparagraph (C) as 
subparagraph (D); 
(C) by inserting after subparagraph (B) 
the following: 
‘‘(C) a Senior Executive Service position 
under section 3132 or 3151, located within the 
United States but outside the 48 contiguous 
States and the District of Columbia, in which 
the incumbent was an individual who on the 
day before the date of enactment of the Non- 
Foreign Area Retirement Equity Assurance Act 
of 2009 was eligible to receive a cost-of-living 
allowance under section 5941; and’’; 
(D) in clause (iv), by inserting ‘‘, except 
for members covered by subparagraph (C)’’ be-
fore the semicolon; and 
(E) in clause (v), by inserting ‘‘, except for 
members covered by subparagraph (C)’’ before 
the semicolon. 
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(b) ALLOWANCES BASED
ON LIVING COSTS
AND 
CONDITIONS OF ENVIRONMENT.—Section 5941 of title 5, 
United States Code, is amended— 
(1) in subsection (a), by adding after the last 
sentence the following: ‘‘Notwithstanding any of the 
preceding provisions of this subsection, the cost-of- 
living allowance rate based on paragraph (1) shall be 
the cost-of-living allowance rate in effect on the date 
of enactment of the Non-Foreign Area Retirement 
Equity Assurance Act of 2009, except as adjusted 
under subsection (c).’’; 
(2) by redesignating subsection (b) as sub-
section (d); and 
(3) by inserting after subsection (a) the fol-
lowing: 
‘‘(b) This section shall apply only to areas that are 
designated as cost-of-living allowance areas as in effect on 
December 31, 2009. 
‘‘(c)(1) The cost-of-living allowance rate payable 
under this section shall be adjusted on the first day of 
the first applicable pay period beginning on or after— 
‘‘(A) January 1, 2010; and 
‘‘(B) January 1 of each calendar year in which 
a locality-based comparability adjustment takes ef-
fect under paragraph (2) or (3) of section 4 of the 
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Non-Foreign Area Retirement Equity Assurance Act 
of 2009. 
‘‘(2)(A) In this paragraph, the term ‘applicable local-
ity-based comparability pay percentage’ means, with re-
spect to calendar year 2010 and each calendar year there-
after, the applicable percentage under paragraph (1), (2), 
or (3) of section 4 of the Non-Foreign Area Retirement 
Equity Assurance Act of 2009, as the case may be. 
‘‘(B) Each adjusted cost-of-living allowance rate 
under paragraph (1) shall be computed by— 
‘‘(i) subtracting 65 percent of the applicable lo-
cality-based comparability pay percentage from the 
cost-of-living allowance percentage rate in effect on 
December 31, 2009; and 
‘‘(ii) dividing the resulting percentage deter-
mined under clause (i) by the sum of— 
‘‘(I) one; and 
‘‘(II) the applicable locality-based com-
parability payment percentage expressed as a 
numeral. 
‘‘(3) No allowance rate computed under paragraph 
(2) may be less than zero. 
‘‘(4) Each allowance rate computed under paragraph 
(2) shall be paid as a percentage of basic pay (including 
any applicable locality-based comparability payment under 
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section 5304 or similar provision of law and any applicable 
special rate of pay under section 5305 or similar provision 
of law).’’. 
SEC. 3. ADJUSTMENT OF SPECIAL RATES. 
(a) IN GENERAL.—Each special rate of pay estab-
lished under section 5305 of title 5, United States Code, 
and payable in an area designated as a cost-of-living allow-
ance area under section 5941(a) of that title, shall be ad-
justed, on the dates prescribed by section 4 of this Act, 
in accordance with regulations prescribed by the Director 
of the Office of Personnel Management under section 8 
of this Act. 
(b) AGENCIES WITH STATUTORY AUTHORITY.— 
(1) IN GENERAL.—Each special rate of pay es-
tablished under an authority described under para-
graph (2) and payable in a location designated as a 
cost-of-living 
allowance 
area 
under 
section 
5941(a)(1) of title 5, United States Code, shall be 
adjusted in accordance with regulations prescribed 
by the applicable head of the agency that are con-
sistent with the regulations issued by the Director of 
the Office of Personnel Management under sub-
section (a). 
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(2) STATUTORY AUTHORITY.—The authority re-
ferred to under paragraph (1), is any statutory au-
thority that— 
(A) is similar to the authority exercised 
under section 5305 of title 5, United States 
Code; 
(B) is exercised by the head of an agency 
when the head of the agency determines it to be 
necessary in order to obtain or retain the serv-
ices of persons specified by statute; and 
(C) authorizes the head of the agency to 
increase the minimum, intermediate, or max-
imum rates of basic pay authorized under appli-
cable statutes and regulations. 
(c) TEMPORARY ADJUSTMENT.—Regulations issued 
under subsection (a) or (b) may provide that statutory 
limitations on the amount of such special rates may be 
temporarily raised to a higher level during the transition 
period described in section 4 ending on the first day of 
the first pay period beginning on or after January 1, 
2012, at which time any special rate of pay in excess of 
the applicable limitation shall be converted to a retained 
rate under section 5363 of title 5, United States Code. 
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SEC. 4. TRANSITION SCHEDULE FOR LOCALITY-BASED 
COMPARABILITY PAYMENTS. 
Notwithstanding any other provision of this Act or 
section 5304 or 5304a of title 5, United States Code, in 
implementing the amendments made by this Act, for each 
non-foreign area determined under section 5941(b) of that 
title, the applicable rate for the locality-based com-
parability adjustment that is used in the computation re-
quired under section 5941(c) of that title shall be adjusted 
effective on the first day of the first pay period beginning 
on or after January 1— 
(1) in calendar year 2010, by using 1⁄3 of the 
locality pay percentage for the rest of United States 
locality pay area; 
(2) in calendar year 2011, by using 2⁄3 of the 
otherwise applicable comparability payment approved 
by the President for each non-foreign area; and 
(3) in calendar year 2012 and each subsequent 
year, by using the full amount of the applicable com-
parability payment approved by the President for 
each non-foreign area. 
SEC. 5. SAVINGS PROVISION. 
(a) SENSE OF CONGRESS.—It is the sense of Con-
gress that— 
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