American Business Media is reporting that advertising coupon mailer ValPak has called on the Postal Service to enforce postal law that requires mail revenues to cover its costs, saying the Commission should exercise its authority to find the Periodicals rates illegal and direct that they be increased by a double-digit percentage to bring them into conformance:

ValPak contended that the Commission may and must take this action even though such an increase would be several times larger than the increase permitted under the applicable CPI rate cap. Alternatively, it said, if the Commission finds that it cannot require an increase above the cap (as ABM had previously contended), it should at least demand that the entire CPI-based increase be targeted on “low-volume, high-cost magazines that are circulated nationally.” Such an increase, of course, would hit ABM member publications especially hard.

ABM will file reply comments by the February 13 deadline and will show that the shortfall cited by ValPak fails to take into account that the present Periodicals rates with the 11.8% average increase were in effect for only two and a half months of FY 2007, that the new rate design will likely have cost-reduction effects and that the new flat sequencing system to be deployed this year will have a further impact on lessening Periodicals costs. ABM will also repeat that the new postal reform law does not permit “piercing” the rate cap even if there is a revenue shortfall and that the effect of an excessive increase on Periodicals, which make up less than 4% of mail volume, would have a nearly immeasurable effect on other mailers.