Tire Exporters Defend 'Bursting Bubble' Theory of Presumptions in AD Case

Exporters Guizhou Tyre Co. and Aeolus Tyre Co. said in a June 20 reply brief that the U.S. ignored the manner in which the U.S. Court of Appeals for the Federal Circuit said presumptions operate under the Federal Rules of Evidence (Guizhou Tyre Co. v. United States, Fed. Cir. # 23-2163).

In Aukerman Co. v. R.L. Chaides Constr. Co., the appellate court employed the "bursting bubble theory of presumptions," under which a presumption "completely vanishes upon the introduction of evidence sufficient to support a finding of the nonexistence of the presumed fact." The U.S. instead said the presumption of state control in antidumping proceedings is a burden put on the respondents to "completely disprove potential government control," the exporters noted (see 2405020051).

In response to the government's arguments, Guizhou and Aeolus also employed the legal definition of the term "presumption," which says most presumptions are "rebuttable, meaning that they are rejected if proven to be false or at least thrown into sufficient doubt with evidence." Contrary to what the U.S. claims, respondents aren't required to "conclusively establish an absence of government control.

The U.S. cited Sigma Corp. v. U.S. to make its claim -- a case in which the appellate court rejected a company's challenge to its separate rate denial for failing to rebut the presumption of foreign state control. Guizhou and Aeolus said almost no evidence was offered in that case, and the fact that this "scant evidence" wasn't enough to rebut the presumption doesn't "stand for the proposition that respondents are only entitled to separate rates if they conclusively establish 'an absence of central government control,'" the brief said.

Guizhou and Aeolus brought their suit to contest Commerce's use of the presumption of foreign state control in the 2014-15 review of the antidumping duty order on new pneumatic off-the-road tires from China. As part of their challenge, they also said Commerce "improperly used the separate rate analysis for majority" state-owned enterprise (SOE)-owned respondents. Separate rate denials for minority SOE-owned companies, such as Guizhou, must be based on "more indicia of control" beyond "potential control," the brief said.

The agency "failed to heed this distinction, denying separate rates upon 'considering whether the government'" can exercise, "or have the potential to exercise, control of a company’s general operations," the brief said. While courts have affirmed Commerce's rejection of separate rate applications for majority SOE-owned firms without evidence that the SOE actually controls their export activities, evidence of "actual control" is needed to deny separate rates for minority SOE-owned companies, the exporters said.