A federal appeals court on Tuesday cleared the way for California to recover $4.6 billion that the state’s attorney general alleges was illegally transferred from Pacific Gas and Electric Co. to its corporate parent before the power utility’s 2001 bankruptcy.

In a 23-page opinion, the 9th U.S. Circuit of Appeals ruled that a San Francisco Superior Court judge should be able to decide the issue raised in a nearly 4-year-old lawsuit filed by California Attorney General Bill Lockyer against PG&E Corp.