FANG LIN AI and DOES 1-1000 v. United States of America

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FANG LIN AI and DOES 1–1000,
Plaintiffs-Appellants,
CONCORDE GARMENT
MANUFACTURING CORPORATION,
Plaintiff-counter-defendant-
Appellant,
v.
UNITED STATES OF AMERICA,
Defendant-counter-claimant-
Appellee.
No. 13-17491
D.C. No.
1:11-cv-00014
OPINION
Appeal from the United States District Court
for the District of the Northern Mariana Islands
Ramona V. Manglona, Chief District Judge, Presiding
Argued and Submitted
June 10, 2015—Honolulu, Hawaii
Filed December 17, 2015
Before: Kim McLane Wardlaw, Marsha S. Berzon,
and John B. Owens, Circuit Judges.
Opinion by Judge Wardlaw

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AI V. UNITED STATES 2
SUMMARY*
Commonwealth of the Northern Mariana Islands /
Federal Insurance Contributions Act
The panel affirmed the district court’s judgment on the
pleadings in favor of the United States, and its holding that
temporary foreign workers in the Commonwealth of the
Northern Mariana Islands (“CNMI”) and their employers are
required to pay Federal Insurance Contributions Act
(“FICA”) taxes, which fund Social Security and Medicare.
Appellants are Concorde Garment Manufacturing
Corporation, and more than 4,000 temporary, Chinese
national, nonresident former employees of Concorde at its
facilities in the CNMI.
The panel held that Section 606(b) of the Covenant
governing U.S.-CNMI relations provided that U.S. laws that
impose excise taxes to support the Social Security system
applied to the CNMI as they applied to Guam. The panel
further held that intervening legislation did not preclude
§ 606(b)’s applicability to appellants. The panel held that the
FICA exemption for nonresident Filipino workers in Guam
did not extend to nonresident Chinese workers in the CNMI.
The panel also held that the applicability to appellants
through the Covenant was not unconstitutionally vague.
Specifically, the panel held that because FICA is a law
that imposes an excise tax to support the Social Security
* This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.

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AI V. UNITED STATES 3
system, it applied to the CNMI as it applied to Guam. The
panel further held that, in turn, FICA applied to all workers
and their employers in Guam, regardless of their citizenship.
The panel concluded, therefore, that FICA also applied to all
workers and their employers in the CNMI, including
appellants, regardless of their citizenship.
COUNSEL
Craig E. Stewart (argued), Kelsey Israel-Trummel, and
Edward Patrick Swan, Jr., Jones Day, San Francisco,
California; Steven P. Pixley, Saipan, Northern Mariana
Islands, for Plaintiff-Counter-Defendant-Appellant.
Colin M. Thompson, Thompson Law Office, LLC, Saipan,
Northern Mariana Islands, for Plaintiffs-Appellants.
Bridget M. Rowan (argued), Tamara W. Ashford, Teresa T.
Milton, United States Department of Justice, Tax Division,
Washington, D.C.; Alicia A.G. Limtiaco, United States
Attorney, United States Attorney’s Office, Saipan, Northern
Mariana Islands, for Defendant-Counter-Claimant-Appellee.

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AI V. UNITED STATES 4
OPINION
WARDLAW, Circuit Judge:
Concorde Garment Manufacturing Corporation, and more
than 4,000 temporary, nonresident former employees of
Concorde, appeal from the district court’s entry of judgment
on the pleadings in favor of the United States.1 The district
court held that temporary foreign workers in the
Commonwealth of the Northern Mariana Islands (“CNMI”)
and their employers are required to pay Federal Insurance
Contributions Act (“FICA”) taxes, which fund Social
Security and Medicare. Section 606(b) of the Covenant
governing U.S.-CNMI relations provides that U.S. laws that
impose excise taxes to support the Social Security system
apply to the CNMI as they apply to Guam.2 Because FICA
is a law that imposes an excise tax to support the Social
Security system, it applies to the CNMI as it applies to Guam.
In turn, FICA applies to all workers and their employers in
Guam, regardless of their citizenship. Therefore, FICA also
applies to all workers and their employers in the CNMI,
1 The district court also entered summary judgment in favor of the
United States on Appellants’ claim for illegal levy. Appellants do not
appeal this decision.
2 The Covenant to Establish a Commonwealth of the Northern Mariana
Islands in Political Union with the United States of America (“Covenant”)
was entered into U.S. law pursuant to Pub. L. No. 94-241, 90 Stat. 263
(1976), and is codified as a note following 48 U.S.C. § 1801. Several of
our opinions have detailed the history of the Covenant and U.S.-CNMI
relations. See, e.g., N. Mariana Islands v. United States, 399 F.3d 1057,
1058–60 (9th Cir. 2005); Saipan Stevedore Co. v. Dir., Office of Workers’
Comp. Programs, 133 F.3d 717, 720–21 (9th Cir. 1998).

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AI V. UNITED STATES 5
including Appellants, regardless of their citizenship. We
therefore affirm the district court.
I. Background
Appellants Concorde Garment Manufacturing
Corporation (“Concorde”) and the Chinese national,
nonresident workers formerly employed at Concorde’s
facilities in the CNMI (“Employees”) paid FICA taxes from
the years 2004 to 2007. In 2008, Appellants filed refund
claims for those payments. The Internal Revenue Service
(“IRS”) refunded Concorde’s 2006 FICA taxes but otherwise
took no action on Appellants’ claims. Thereafter, Appellants
sued the United States in the U.S. District Court for the
Northern Mariana Islands to recover the remainder of the
FICA taxes they had paid. The United States counter-claimed
to recover the refund of Concorde’s 2006 FICA taxes, which
it argued was erroneously issued. The district court ruled that
all workers and their employers in the CNMI are subject to
FICA, regardless of the citizenship of either.
Appellants timely filed this appeal, arguing that (1) the
Covenant was intended to subject only CNMI citizens, not
temporary nonresident foreign workers, to FICA taxes;
(2) even if FICA generally applies to all workers and their
employers in the CNMI, Employees are entitled to the FICA
tax exemption for temporary nonresident Filipino workers in
Guam; (3) even if the first two arguments are rejected, the
employee portion of FICA does not apply because it is an
income tax, and only excise and self-employment taxes that
support Social Security apply to the CNMI; and (4) the

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AI V. UNITED STATES 6
statutory basis for applying FICA to Appellants is
unconstitutionally vague.3
II. Standard of Review
We review de novo an order granting judgment on the
pleadings, accepting facts alleged by the nonmoving party as
true and drawing all inferences in its favor. LeGras v.
AETNA Life Ins. Co., 786 F.3d 1233, 1236 (9th Cir. 2015).
We also review de novo underlying issues of statutory
interpretation and constitutionality. Fournier v. Sebelius,
718 F.3d 1110, 1117–18 (9th Cir. 2013), cert. denied, 134 S.
Ct. 1501 (2014).
We have held that “taxing statute[s] must be construed
most strongly in favor of the taxpayer and against the
government.” Greyhound Corp. v. United States, 495 F.2d
863, 869 (9th Cir. 1974). However, “[w]e are not impressed
by the argument that [any doubtful question] should be
resolved in favor of the taxpayer.” White v. United States,
305 U.S. 281, 292 (1938). Thus, “where the rights of suitors
turn on the construction of a [tax] statute . . . it is our duty to
decide what that construction fairly should be,” and “doubts
which may arise upon a cursory examination of [tax statutes
may] disappear when they are read, as they must be, with
every other material part of the statute, and in the light of
their legislative history.” Id. (citation omitted); see also Irwin
v. Gavit, 268 U.S. 161, 168 (1925) (“It is said that the tax
laws should be construed favorably for the taxpayers. But
3 Appellants adopted the arguments made in American Pacific Textile,
Inc. v. United States, No. 13-16348. We therefore address those
arguments here and resolve issues specific to the American Pacific appeal
in a concurrently filed memorandum disposition.

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AI V. UNITED STATES 7
that is not a reason for creating a doubt or for exaggerating
one when it is no greater than we can bring ourselves to feel
in this case.”).
Therefore, while tax statutes “are not to be extended by
implication beyond the clear import of the language used,”
United States v. Merriam, 263 U.S. 179, 187–88 (1923), we
do not mechanically resolve doubts in favor of the taxpayer
but instead resort to the ordinary tools of statutory
interpretation. Ultimately, “the literal meaning of the words
employed is most important.”4 Id.; see also United States v.
Fei Ye, 436 F.3d 1117, 1120 (9th Cir. 2006) (“If the plain
language of a statute renders its meaning reasonably clear,
[we] will not investigate further unless its application leads to
unreasonable or impracticable results.”) (internal quotation
marks and citation omitted); N. Mariana Islands v. United
States, 279 F.3d 1070, 1074 n.5 (9th Cir. 2002) (“We would
be undermining congressional intent if we were to decline to
give effect to what section 502(a)(2) of the Covenant by its
terms requires . . . .”).
4 Appellants view the Covenant as a statute. At the same time,
Appellants adopt arguments made by the American Pacific appellants that
depend, somewhat contradictorily, on interpreting the Covenant not as a
statute but instead as a treaty-like agreement. Appellants therefore urge
us to look more liberally to the Covenant’s drafting history than we might
in construing a statute. See Minnesota v. Mille Lacs Band of Chippewa
Indians, 526 U.S. 172, 202 (1999) (“[R]eview of the history and the
negotiations of the agreements is central to the interpretation of treaties.”).
We believe that the Covenant is best viewed as “a congressionally
approved compact [that] is both a contract and a statute . . . . [such that]
resort to extrinsic evidence of the [Covenant’s] negotiations . . . is entirely
appropriate.” Oklahoma v. New Mexico, 501 U.S. 221, 235 n.5 (1991).

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AI V. UNITED STATES 8
We note that the Federal Circuit has ruled in favor of the
government and against the taxpayers in a materially
indistinguishable case, a decision which is persuasive, though
not dispositive. See Zhang v. United States, 640 F.3d 1358
(Fed. Cir. 2011) (Zhang II), cert. denied, 132 S. Ct. 2375
(2012).5 We have recognized, however, that “‘[u]niformity
among Circuits is especially important in tax cases to ensure
equal and certain administration of the tax system.’” Hill v.
Comm’r, 204 F.3d 1214, 1217 (9th Cir. 2000) (quoting Pac.
First Fed. Sav. Bank v. Comm’r, 961 F.2d 800, 803 (9th Cir.
1992)). That is particularly true where, as here, a circuit split
would create two mutually exclusive rules applicable to the
CNMI, leading to uncertainty and obvious forum shopping
opportunities.
III. Discussion
A. The CNMI Is “Within the United States” for Purposes of
FICA.
1. Covenant § 606(b)
FICA imposes an employer and an employee tax on
wages “with respect to employment.” See 26 U.S.C.
§§ 3101(a) (“employee tax”), 3111(a) (“employer tax”).
FICA applies to wages related to work performed “within the
United States,” “irrespective of the citizenship or residence of
either” the employee or employer, id. § 3121(b), and to wages
related to work performed “outside the United States” by a
U.S. citizen or resident “as an employee for an American
5 In Zhang II, the Federal Circuit reviewed and ultimately affirmed a
thorough opinion by the Court of Federal Claims addressing the same
issue. See Zhang v. United States, 89 Fed. Cl. 263 (2009) (Zhang I).

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AI V. UNITED STATES 9
employer,” id. Section 3121(e)(2) defines the term “United
States” when it is used in a geographical sense to include the
Commonwealth of Puerto Rico, the Virgin Islands, Guam,
and American Samoa.6 Thus, wages for services performed
in Guam are subject to both the employee and employer
provisions of FICA, “irrespective of the citizenship or
residence of either” the employee or the employer. Id.
§ 3121(b).
Section 606(b) of the Covenant, in turn, provides:
Those laws of the United States which impose
excise and self-employment taxes to support
or which provide benefits from the United
States Social Security System will upon
termination of the Trusteeship Agreement or
such earlier date as may be agreed to by the
Government of the Northern Mariana Islands
and the Government of the United States
become applicable to the Northern Mariana
Islands as they apply to Guam.
Just as in Guam, then, wages for services performed in the
CNMI are subject to FICA taxes, irrespective of citizenship
or residence. See id.; 26 U.S.C. § 3121(b). We hold that the
district court correctly held that Appellants, who paid and
received wages for services performed in the CNMI, are
6 “United States” is used in a geographical sense in 26 U.S.C. § 3121(b).
This is evident from the section’s juxtaposition of “within the United
States,” id. (emphasis added), and “outside the United States,” id.
(emphasis added). Accordingly, it is undisputed that Guam is “within the
United States” for purposes of FICA. See Zhang II, 640 F.3d at 1367.

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AI V. UNITED STATES 10
required to pay FICA taxes on those wages, even though
Employees were temporary nonresident Chinese nationals.7
2. Covenant § 606(b) is not limited to citizens or
residents of Guam or the CNMI.
Appellants attempt to steer us away from this
straightforward conclusion, which flows directly from the
plain language of Covenant § 606(b), by advocating a
citizenship-based application of FICA to the CNMI. They
argue that the phrase in Covenant § 606(b) “as they apply to
Guam” is ambiguous, and that the term “Guam” does not
mean “Guam,” but actually means “the people who reside in
or who are citizens of [that] geographic area[].”8 From this
manufactured ambiguity, Appellants assert that § 606(b)’s
reference to the CNMI is also ambiguous and could refer to
persons in the CNMI, rather than to the geographic area itself.
Appellants then argue that § 606(b) does not refer to all the
people in the CNMI, but instead refers only to citizens of the
CNMI. Under this tortured reading of the Covenant,
Appellants conclude that § 606(b) subjects only CNMI
citizens and their employers to FICA taxes.
There is no plausible method by which to arrive at
Appellants’ conclusion from the plain language of the
7 We discuss whether the FICA tax on employee wages is “a law[] of the
United States which impose[s] excise and self-employment taxes to
support . . . the United States Social Security System” in Section III.C.
8 See Hearing Before the Subcomm. on Territorial and Insular Affairs
of the H. Comm. on Interior and Insular Affairs on H.J. Res. 549, 550, and
547 to Approve the “Covenant to Establish a Commonwealth of the
Northern Mariana Islands in Political Union with the United States of
America,” 94th Cong. 376 (1975).

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AI V. UNITED STATES 11
Covenant and, were § 606(b) amenable to a citizenship-based
application, we would decline to adopt that construction
because FICA is incompatible with such an application.
To begin with, § 606(b) does not mention citizenship or
people, and we see no reason to read those words into the
Covenant. Moreover, even if we were to read references to
geographic areas as references to people in those geographic
areas, our reading would not be limited to citizens. The very
extrinsic drafting material Appellants rely upon actually
suggests the contrary conclusion. It suggests that references
to Guam or to the CNMI could refer either to the geographic
areas or “to the people who reside in or who are citizens of”
those geographic areas. See 94th Cong. 376. (emphasis
added). Thus, there is no plausible way to limit the
applicability of § 606(b)’s cross-reference exclusively to the
citizens as opposed to the residents of the CNMI.9
Further, to the extent that any ambiguity exists as to
whether the cross-reference to Guam refers to people as
opposed to geography, the plain language of FICA compels
us to adopt the geographic application. By its terms, FICA
never applies solely based upon a worker’s citizenship.
Rather, FICA applies in two instances: (1) when work is
performed within the United States, and (2) when work is
performed by a U.S. citizen for an American employer. See
26 U.S.C. § 3121(b). Therefore, unless we construe § 606(b)
to include the CNMI within the United States geographically,
9 And FICA, in turn, applies to the CNMI as it applies to Guam—where
nonresident workers are subject to the FICA tax on employee wages
because they performed work “within the United States,” 26 U.S.C.
§ 3121(b), regardless of whether they were temporary nonresident
workers.

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AI V. UNITED STATES 12
FICA would not require CNMI citizens to pay FICA taxes
unless they were working for an American employer. See id.
There is no indication that FICA was intended to have such
a limited effect within the CNMI. Indeed, because CNMI
citizens became U.S. citizens under the Covenant—meaning
they already must pay FICA taxes when working for an
American employer—such an outcome would render § 606(b)
meaningless. See Covenant § 303; 26 U.S.C. § 3121(b).10
We avoid this result and afford § 606(b) meaning by
concluding that, through operation of the cross-reference to
Guam, the CNMI is brought within the geographical territory
of the United States for purposes of FICA.
3. Intervening legislation does not preclude § 606(b)’s
applicability.
Appellants assert that even if they were subject to FICA
pursuant to Covenant § 606(b) as originally drafted, two
statutes enacted after the Covenant was approved, but before
§ 606(b) became effective in 1986, preclude application of
FICA to Appellants. We disagree.
First, Appellants look to a 1981 amendment to 42 U.S.C.
§ 1301, which altered the definition of the term “State” in the
Social Security Act. In doing so, the amendment extended
the application of certain benefit provisions to the CNMI.
10 There is a third possibility—that § 606(b) somehow expanded the
definition of “American employer.” Appellants actually raise this
argument, claiming that “CNMI employers—like those of Guam—would
be considered ‘American employers’” for purposes of applying 26 U.S.C.
§ 3121(b). The notion that § 606(b)—which applies FICA to the CNMI
as it applies to Guam—is somehow intended narrowly to expand the
definition of American employer is nonsensical, and we need not elaborate
on this conclusion.

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AI V. UNITED STATES 13
Critically, from Appellants’ perspective, although the
amendment expressly mentioned both the CNMI and Guam,
a different menu of benefits was extended to each. See
42 U.S.C. § 1301(a)(1) (1982). Appellants assert that this
amendment demonstrates Congress’s intent to treat Guam and
the CNMI differently, and that it is therefore improper to
mechanically substitute the CNMI for Guam in Covenant
§ 606(b).
This argument is without merit, and like the Federal
Circuit, we reject it. See Zhang II, 640 F.3d at 1368
(“Contrary to Appellants’ arguments, Congress did not
subsequently abandon the substitution of Guam for the CNMI
by enacting 42 U.S.C. § 1301.”); see also Zhang I, 89 Fed. Cl.
at 281–82. Before the amendment to § 1301, Social Security
benefits in the CNMI were linked to benefits in Guam
pursuant to Covenant § 606(b). The amendment operated to
eliminate the benefit parity between the two territories. But
there is no indication that Congress intended its amendment
to Social Security benefits to extend to FICA taxes. Indeed,
far from supporting Appellants’ conclusion, that Congress did
not amend any taxation provisions when it amended the
benefits provisions confirms Congress’s intent that FICA
taxes remain applicable to the CNMI as to Guam. Thus, the
CNMI’s FICA tax treatment remains linked to Guam’s
pursuant to Covenant § 606(b).
Second, Appellants direct us to Section 19 of the Act of
1983, Pub. L. No. 98-213, 97 Stat. 1459. U.S.-CNMI
relations were governed by a Trusteeship Agreement
following World War II. During the unexpectedly delayed
transition from the Trusteeship Agreement to the Covenant,
CNMI citizens did not meet the U.S. citizenship requirement

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AI V. UNITED STATES 14
included in many statutory benefit provisions.11 As the
Federal Circuit has explained, § 19’s purpose was “to
accelerate CNMI citizens’ receipt of certain statutory benefits
to which they otherwise would not have been entitled until
termination of the Trusteeship Agreement.” Zhang II,
640 F.3d at 1368. The Act accomplished this purpose by
waiving the U.S. citizenship requirement for certain benefits.
Section 19 of the Act provides:
(a) The President may . . . provide that the
requirement of United States citizenship or
nationality provided for in any of the statutes
listed on pages 63–74 of the Interim Report
. . . shall not be applicable to the citizens of
the Northern Mariana Islands. . . .
(b) A statute which denies a benefit or
imposes a burden or a disability on an alien,
his dependents, or his survivors shall, for the
purposes of this Act, be considered to impose
11 Covenant § 504 created a Commission on Federal Laws. The
Commission was tasked with making recommendations to Congress about
the application of certain U.S. laws to the CNMI during the interim period
before termination of the Trusteeship Agreement. In the Commission’s
First Interim Report, it observed that “[m]any federal laws require United
States citizenship as a prerequisite to enjoyment of rights and privileges
conferred by those laws.” Interim Report of the N. Mariana Islands
Comm’n on Fed. Laws to the Congress of the United States, 4–6 (1982)
(“Interim Report”). The Commission concluded that CNMI citizens
should enjoy these rights and privileges during the possibly prolonged
period before the termination of the Trusteeship Agreement, and it
therefore proposed legislation that would treat CNMI citizens as United
States citizens for purposes of certain federal statutes already applicable
to the CNMI. Id. at 6.

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AI V. UNITED STATES 15
a requirement of United States citizenship or
nationality.
Reading the two subsections together, § 19(b) clarifies which
of the statutes listed in the Interim Report referenced in
§ 19(a) contains a “requirement of United States citizenship.”
Thus, § 19(b) defines the type of statutory provision for
which the President may waive a requirement of United
States citizenship pursuant to the authority granted in § 19(a).
Appellants read § 19(b) out of context when they contend
that it actually reads a U.S. citizenship requirement into all
U.S. statutes that “den[y] a benefit or impose[] a burden or a
disability on an alien.” It turns the Act of 1983 on its head to
conclude that § 19(b) excludes aliens from both the benefits
and the burdens of a wide range of laws. The very purpose of
the 1983 Act was to include CNMI citizens, who remained
“aliens” until the official termination of the Trusteeship
Agreement in 1986, within benefits programs that explicitly
required U.S. citizenship. We therefore join the Federal
Circuit in holding that § 19 of the Act of 1983 has no effect
on the applicability of FICA to nonresident workers in the
CNMI. See Zhang II, 640 F.3d at 1368–70.
B. The FICA Exemption for Nonresident Filipino Workers in
Guam Does Not Extend to Nonresident Chinese Workers
in the CNMI.
Appellants next argue that even if FICA applies to
nonresident workers and their employers in the CNMI
generally, Appellants fit within an exemption to FICA
taxation that Congress created for certain nonresident workers
in Guam. The exemption on which Appellants rely, however,
is expressly limited to Filipino citizens admitted to Guam

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AI V. UNITED STATES 16
under H-2 visas. See 26 U.S.C. § 3121(b)(18).12 Pursuant to
Covenant § 606(b), then, Filipinos admitted to the CNMI
under H-2 visas arguably would be exempt from FICA.
However, even if we overlooked the fact that Employees
were not admitted to the CNMI pursuant to H-2 visas, the
exemption remains plainly inapplicable because Employees
are Chinese nationals.13
Moreover, as Appellants concede, Filipinos were not the
only temporary nonresident workers in Guam when the
exemption was created. See U.S. House of Rep., Comm. on
the Judiciary, Subcomm. on Immigration, Citizenship, and
Int’l Law, The Use of Temporary Alien Labor on Guam 3–4
(1975). In light of this demographic reality, Congress’s
decision to expressly limit the exemption to Filipinos, in part
because of our nation’s unique political ties with the
Philippines, suggests that the exemption was not meant to
12 This section of FICA exempts from the definition of employment any
“service performed in Guam by a resident of the Republic of the
Philippines while in Guam on a temporary basis as a nonimmigrant alien
admitted to Guam pursuant to section 101(a)(15)(H)(ii) of the Immigration
and Nationality Act.” 26 U.S.C. § 3121(b)(18).
13 We need not decide whether the exemption would apply to Filipinos
in the CNMI who were not admitted pursuant to H-2 visas but were
instead admitted pursuant to the CNMI’s local immigration law. This is
a close question. During the relevant time period—2004 to 2007—the
CNMI was not subject to the Immigration and Naturalization Act, and
instead maintained the authority to create its own immigration laws.
Accordingly, from 2004 to 2007, temporary workers entered the CNMI
pursuant to the CNMI’s Nonresident Workers Act. See 3 N. Mar. I. Code
§ 4411, et seq. Thus, although temporary nonresident Filipinos in the
CNMI are the exact type of worker Congress sought to exempt from
FICA, these workers do not technically satisfy all statutory elements of the
exemption.

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AI V. UNITED STATES 17
cover all nonresident workers in Guam. In sum, Congress
singled out Filipinos for preferential treatment. Because it is
undisputed that Employees are not Filipinos, the exemption
does not apply to them.
C. FICA and SECA Apply in Their Entirety to the CNMI as
They Apply to Guam.
Section 606(b) states that “[t]hose laws of the United
States which impose excise and self-employment taxes to
support . . . the United States Social Security system will . . .
become applicable to the [CNMI] as they apply to Guam.”
Covenant § 606(b). Appellants contend that even if FICA
generally applies to the CNMI, the employee portion does not
apply because it is an income tax, not an excise or self-
employment tax. See 26 U.S.C. § 3101(a) (imposing “on the
income of every individual a tax”). In other words,
Appellants read § 606(b) as if it contains an additional
limitation: “Those laws of the United States which impose
only excise taxes and only self-employment taxes to support
. . . the United States Social Security system will . . . become
applicable to the [CNMI] as they apply to Guam.”
Appellants misread the provision.
Section 606(b) does not contain the limitation suggested
by Appellants, nor does it state that excise taxes apply in the
CNMI as in Guam. Instead, § 606(b) provides that those laws
which impose such taxes apply in the CNMI as in Guam. The
difference is subtle but crucial: Laws imposing excise taxes,
and not simply the excise taxes themselves, apply in the
CNMI as in Guam. In short, if a law imposes an excise tax to
support Social Security, the law—not just that part of the law

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AI V. UNITED STATES 18
imposing an excise tax—applies in the CNMI as in Guam.14
Because FICA imposes an excise tax, it applies in the CNMI
as in Guam. And because FICA subjects employees in Guam
to taxation, it subjects employees in the CNMI to FICA taxes
as well.
This plain reading of § 606(b) is reinforced by the
section’s additional reference to laws imposing self-
employment taxes. While the reference to laws imposing
excise taxes is sufficient to capture FICA in its entirety, self-
employment taxes that support Social Security are not
included in FICA. Instead, they are found in the Self-
Employment Contributions Act (“SECA”). See 26 U.S.C.
§§ 1401–03. Therefore, while there are three general taxes
that support the Social Security system—the employee FICA
tax, the employer FICA tax, and SECA taxes—there are only
two laws imposing those taxes—FICA and SECA. And
Covenant § 606(b)’s language is designed to render both laws
applicable to the CNMI as they apply to Guam.
Any doubt that this reading is correct is dispelled when
§ 606(b) is considered in the context of the Covenant as a
whole. Another of the Covenant’s provisions, Section 601(a),
provides that “[t]he income tax laws in force in the United
States” apply in the CNMI “in the same manner as those laws
are in force in Guam.” Covenant § 601(a) (emphasis added).
14 Although it might be possible to treat 26 U.S.C. § 3111, the employer
portion of FICA, as a separate law from § 3101, the employee portion,
such treatment is untenable. Both § 3101 and § 3111 rely on § 3121,
among other provisions. Thus, § 3111 is incomplete without the
remainder of FICA. Because § 3111 cannot be viewed as a “law” in
isolation from the overarching statute, the law at issue in Covenant
§ 606(b) is not merely the employer portion of FICA. The law is instead
FICA as a whole, which necessarily includes the employee portion.

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AI V. UNITED STATES 19
The reason for the omission of any specific reference to
income taxes in § 606(b) is therefore apparent: Section
601(a) already makes clear that such taxes are applicable in
the CNMI. Section 601(a) thus clarifies that “[t]hose laws of
the United States which impose excise and self-employment
taxes to support . . . the United States Social Security System”
do indeed include the employee portion of FICA.
To the extent that the phrase “those laws” is ambiguous,
in that the laws could be broken down further to include only
26 U.S.C. § 3111(a) (the portion of FICA imposing an excise
tax), rather than all of FICA, we may look to extrinsic
drafting sources to resolve this ambiguity. See Diamond v.
Chakrabarty, 447 U.S. 303, 315 (1980) (“[O]ur obligation is
to take statutes as we find them, guided, if ambiguity appears,
by the legislative history and statutory purpose.”). The
available extrinsic evidence overwhelmingly suggests that the
drafters intended that all FICA taxes apply.
Both the House and Senate Reports produced in
connection with Congress’s approval of the Covenant
provide: “Subsection (b) [of Covenant § 606] assures that the
laws of the United States which impose taxes to support . . .
the United States Social Security System will become
applicable to the Northern Marianas as they are applicable to
Guam upon termination of the Trusteeship Agreement . . . .”
H.R. Rep. No. 94–364, at 11 (1975); S. Rep. No. 94–433, at
83 (1975). As the Federal Circuit aptly observed, “[t]he
reports do not distinguish the employer FICA tax from the
employee FICA tax, nor do they suggest that one tax applies
but the other does not.” Zhang II, 640 F.3d at 1374.
The Section–by–Section Analysis of the Covenant—
published by the Marianas Political Status Commission,

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AI V. UNITED STATES 20
which assisted in the Covenant’s drafting—also does not
distinguish between the employer and employee FICA taxes.
See Zhang II, 640 F.3d at 1375 (noting that “Congress
considered the Section–by–Section Analysis prior to
approving the Covenant”) (citing S. Rep. No. 94–433, at
65–94); N. Mariana Islands, 399 F.3d at 1065 (“We have
relied in previous opinions on the Marianas Political Status
Commission’s authoritative Section–by–Section Analysis of
the Covenant to assist us in discerning the meaning of the
Covenant.”) (internal quotation marks omitted). Describing
Covenant § 606(b), the Section–by–Section Analysis states:
Subsection (b) [of § 606] assures that the laws
of the United States which impose taxes to
support or which provide benefits from the
United States Social Security System will
become applicable to the Northern Marianas
as they are applicable to Guam upon
termination of the Trusteeship Agreement. . . .
At this time as well, those laws of the United
States which impose taxes to support the
United States Social Security System will
become applicable. The reason that the
Covenant is structured in a way which does
not make the United States social security
laws applicable immediately is that the taxes
which are imposed to support the social
security system are very burdensome as
compared to the taxes which are paid by the
people of the Northern Marianas today . . .
[T]hese laws will become effective in the
Northern Marianas no later than termination
of the Trusteeship, at which time the entire
Covenant will be effective.

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AI V. UNITED STATES 21
Marianas Political Status Comm’n, Section–by–Section
Analysis of the Covenant to Establish a Commonwealth of the
Northern Mariana Islands, 80–81 (1975) (emphasis added).
Likewise, the Commission on Federal Laws, see
Covenant § 504, did not distinguish between the two taxes.
In pertinent part, the summary section of the Commission’s
Second Interim Report states: “Employers and employees in
the Northern Mariana Islands are made subject to taxes
imposed by [FICA] to support the federal social security
system at the time the social security systems of the Northern
Mariana Islands and the United States are merged . . . .”
Second Interim Report of the N. Mariana Islands Comm’n on
Fed. Laws to the Congress of the United States 415 (1985).
More specifically, the Second Interim Report contains a
section entitled “Employment Taxes,” which explains that
under FICA, “[t]he employer and employee are each required
to pay taxes.” Id. at 465.
In light of this legislative history, we resolve any
ambiguity in § 606(b) by concluding that the word “laws”
refers to the entire law containing the tax in question—i.e.,
FICA and SECA. See also Zhang I, 89 Fed. Cl. at 281
(“The[] legislative documents are uniform in their treatment
of section 606(b), unambiguously demonstrating that all
FICA tax provisions were intended to apply to the CNMI.”).
Moreover, reading § 606(b) to apply the employer portion
of FICA without the employee portion would mean
subjecting CNMI employers but not CNMI employees to
FICA taxation, even though many of the exempt CNMI
employees would be able to receive benefits under the
system. See Zhang II, 640 F.3d at 1363 (discussing the Court

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AI V. UNITED STATES 22
of Federal Claims’ conclusion that Congress clearly intended
to avoid such an absurd result).
Ultimately, the text of § 606(b) provides that FICA—a
law imposing an excise tax—applies to the CNMI as it
applies to Guam. In Guam, employees are subject to FICA,
and thus the same is true in the CNMI, regardless of whether
that tax is an excise tax or an income tax. It is the law
containing the excise tax that applies to the CNMI as to
Guam, not merely the “excise tax” itself. See Covenant
§ 606(b).15
D. The Applicability of FICA to Appellants Through the
Covenant Is Not Unconstitutionally Vague.
Appellants argue that, because the IRS has not explained
consistently why FICA taxes apply to them, the statutory
scheme is unconstitutionally vague. See Vill. of Hoffman
Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489,
497–99 (1982) (explaining that the void for vagueness
doctrine applies to civil statutes). Contrary to Appellants’
suggestion, however, the question is not whether the
government applied or interpreted FICA consistently.
Instead, the question is whether the scheme that subjects
Appellants to FICA taxes is “so vague and indefinite as really
to be no rule or standard at all,” Boutilier v. INS, 387 U.S.
15 We note that the district court also relied on Covenant § 601(a) and (c)
in concluding that FICA applies in its entirety to the CNMI. However, we
may affirm on any ground supported by the record. See Columbia
Pictures Indus., Inc. v. Fung, 710 F.3d 1020, 1030 (9th Cir. 2013), cert.
dismissed, 134 S. Ct. 624 (2013). Because we hold that Covenant
§ 606(b) renders both employee and employer FICA taxes applicable to
the CNMI, we do not reach the parties’ alternative contentions concerning
the applicability of Covenant § 601(a) and (c).

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AI V. UNITED STATES 23
118, 123 (1967), or whether a person of ordinary intelligence
could understand that the scheme requires payment of FICA
taxes, see Ass’n des Eleveurs de Canards et d’Oies du
Quebec v. Harris, 729 F.3d 937, 946 (9th Cir. 2013).
FICA’s applicability to Appellants is not unclear, as
evidenced most prominently by Appellants’ payment of FICA
taxes from 2004 through 2007. See, e.g., United States v.
Moore, 109 F.3d 1456, 1467 (9th Cir. 1997) (finding Gun
Control Act was not unconstitutionally vague where “[t]he
record show[ed] that both [defendants] understood their
respective legal obligations”). Moreover, the Court of
Federal Claims, the Federal Circuit, and the District Court for
the Northern Mariana Islands have each reached the same
conclusion—that Appellants are subject to FICA taxes. If
anything, that these courts have arrived at this conclusion by
different statutory routes suggests that the relevant statutory
scheme advised Appellants in multiple ways that they must
pay FICA taxes.
Appellants themselves, all courts to consider the issue,
and the IRS have consistently read the statutory scheme as
requiring Appellants to pay employer and employee FICA
taxes. Appellants’ position was not frivolous, and they were
justified in requesting a refund from the IRS. But having a
colorable argument that FICA taxes do not apply does not
render the statute unconstitutionally vague.16
16 Moreover, it does not appear that Appellants face any penalty. They
simply must pay the tax. This is not a situation where a party acted in
reliance on the law (or in ignorance of a law due to lack of clarity) only to
be subject to a penalty or, worse yet, criminal sanctions, because it acted
in accordance with a reasonable understanding of the law. Thus, to the
extent that vagueness concerns apply at all in this case, those concerns are
de minimis. See, e.g., Groome Resources Ltd., L.L.C. v. Par. of Jefferson,

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AI V. UNITED STATES 24
IV. Conclusion
For the foregoing reasons, we AFFIRM the district
court’s entry of judgment on the pleadings in favor of the
United States on Appellants’ claims, as well as the district
court’s entry of judgment on the pleadings in favor of the
United States on the United States’ counterclaim.
234 F.3d 192 (5th Cir. 2000) (affirming entry of permanent injunction
against Parish, which delayed granting a zoning accommodation to the
developer of an Alzheimer’s care facility, where the delay would impose
financial penalties upon the developer and the Parish argued in part that
statutory vagueness justified the delay).

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