In the 1990 case Freeport-McMoRan Inc. v. K N Energy, Inc., the U.S Supreme Court dealt with a dispute over natural gas contracts between two companies: Freeport-McMoRan and K N Energy. The issue at hand was whether or not an arbitration award should be vacated due to evident partiality of arbitrators under section 10(b) of Federal Arbitration Act (FAA). The court held that "evident partiality" within the meaning of FAA will be found where a reasonable person would have to conclude that an arbitrator was partial to one party in dispute. In this particular case, it was revealed after the arbitration decision had been made that one of three arbitrators appointed by American Arbitration Association had business dealings with Freeport's parent company which he did not disclose prior to his appointment as an arbitrator for this dispute resolution process. Despite these revelations, Supreme Court upheld lower courts' decisions refusing to vacate arbitration award on grounds of evident partiality because there wasn't enough evidence proving actual bias or prejudice against K N Energy.

In the dissenting opinion for Freeport-McMoRan Inc. v. K N Energy, Inc., Justice Scalia disagreed with the majority's interpretation of the Natural Gas Act (NGA). He argued that under Section 1(b) of the NGA, Federal Energy Regulatory Commission (FERC) jurisdiction does not extend to direct sales for resale in interstate commerce because such transactions are not "transportation" or "sale." Instead, they should be considered as part of production and gathering which is exempted from FERC regulation by Section 1(b). Furthermore, he contended that even if these transactions were subject to FERC jurisdiction under some other provision of law outside Section 1(b), it would still be inappropriate to apply a federal common law rule in this case since Congress has provided an adequate remedy through state contract law. Therefore, according to Justice Scalia’s view on statutory interpretation and legislative intent behind NGA provisions, there was no need for federal intervention into what essentially constituted a contractual dispute between private parties.