A major roadblock to Equitable Resources' $970 million purchase of Dominion Peoples may have been cleared yesterday when a federal judge halted the Federal Trade Commission's efforts to block the sale.

In a terse, two-sentence order, U. S. District Judge Arthur J. Schwab granted Equitable's request to dismiss the FTC's complaint seeking a temporary restraining order and preliminary injunction to stop the transaction, first unveiled 14 months ago. The FTC's complaint, which alleged that the deal would lead to higher prices for some nonresidential natural gas customers in Western Pennsylvania, was filed just hours after the state Public Utility Commission unanimously approved the transaction last month.

In a 19-page opinion accompanying his order, Judge Schwab said that the PUC's approval of the transaction qualifies for "state action immunity." Simply put, that means that the agency's action is immune from contradiction by the FTC, which "must defer" to the PUC's regulatory oversight of utilities in Pennsylvania.

The FTC did not say whether or not it will appeal the ruling. David Wales, deputy director of the agency's bureau of competition, limited himself to saying that the FTC was "reviewing the judge's opinion very closely and will be considering our options going forward."

But because Judge Schwab's decision was based on the immunity doctrine, rather than on the specifics of the transaction, it could influence future cases. For that reason, some observers in the legal community expect the FTC to go for another round in court.

"I think there's a very good chance that the FTC will appeal this because of the broader applications," said antitrust attorney Daniel Sasse, a partner in the Washington, D.C.-based firm of Crowell & Moring LLP.

Although the transaction has passed muster with the PUC and withstood an initial challenge from the FTC, it is still under review by the state attorney general's office, which is examining it to determine if it is anti-competitive. That investigation has no set date for its conclusion.

While the PUC has approved the sale of Dominion Peoples, its counterpart in West Virginia is in the early stages of reviewing Equitable's purchase of Dominion Hope, which is also part of the Equitable-Dominion deal. The West Virginia Public Service Commission, which must approve that sale, has alleged that Dominion Hope manipulated regulators to inflate profits.

If the PSC does not approve the Dominion Hope sale, that could undo the entire deal, which Equitable spokeswoman Patricia Kornick described as "a combined acquisition in which the acquisition of Dominion Hope and Dominion Peoples are intertwined." Doing one part of the deal without the other -- completing the Dominion Peoples transaction without the Dominion Hope piece -- would require re-doing the deal between Equitable and Dominion, which is slated to expire June 30, she said.

The PSC's allegations arise partly from secretly taped conversations of a disgruntled former executive. In more than 100 pages of phone transcripts filed by the West Virginia agency, Dominion officials appear to talk about schemes to buy gas at inflated prices so Dominion and its drilling affiliates could benefit at ratepayer expense.

According to the filing, which was obtained by The Charleston (W.Va.) Gazette, if Dominion Hope was cheating ratepayers, the PSC could order the utility to pay back consumers. "The implications of the information is so far-reaching that it may even potentially impact the appropriate purchase price for Dominion Hope," the filing said.

One exchange apparently captures the head of the Dominion Field Services affiliate, Charles Roberts, complaining to Dominion Hope's former manager for pricing and regulatory affairs, Paul Kroll. Mr. Kroll was in negotiations to buy gas from Mr. Roberts' group.

"I'm supposed to be looking out for Hope," Mr. Roberts says. "But there's got to be some skin in it for me, and that's what I was trying to do. (Inaudible)

"We can find you direct feed supply. Save you and the ratepayer, and I like to do that, but there has to be some skin in it for us. And now, yeah, there is not much money and you're taking away our existing margins and just to pass it on to the ratepayers. Tell me what I'm missing."

Dominion Hope says the phone conversations have been taken out of context and would absolve them of wrongdoing if heard in full.

"These were all self-edited by Paul Kroll in order to put people in a certain light," said Dominion Hope spokesman Dan Donovan. "The whole tape is not there, and the other person doesn't know they're being recorded."

Mr. Kroll quit in 2005, alleging that his complaints about price manipulation were met with "serious and intolerable adverse and hostile working conditions." His lawsuit against Dominion Hope in Harrison County Circuit Court will be heard this summer. Mr. Kroll did not return a call from the Gazette for comment.

The purchase of Dominion Hope would make Equitable the state's second-biggest gas provider, behind Mountaineer Gas Co. of Charleston.

The latest allegations don't appear to have soured the deal for Equitable Resources.

"Equitable Resources is eager to bring the benefits of this acquisition to the customers and region and is continuing through the approval process," Ms. Kornick said. "Equitable is monitoring the PSC hearings and will assess the situation after the PSC renders a decision regarding Dominion Hope."

The company continues to speak and act as if it expects the deal to go through -- for instance, by continuing its search for a location where it can lease or build an additional 300,000 to 350,000 square feet of office space somewhere in southwestern Pennsylvania. Ms. Kornick said the company is keeping "all options open," including its current spot on the North Shore, where it leases 156,000 square feet in a new building next to PNC Park.

Equitable has hired David Koch and Larry Teel of Fischer & Co. to represent the company in its search.

The process may result in another location somewhere in the central business district or in Equitable's departure from the city -- one option on the table is to move north to Cranberry.

"We have not necessarily ruled out anything," said Ms. Kornick, who was not willing to confirm specific sites.

Asked if the company could leave the region altogether, if a site outside the state was under consideration, Ms. Kornick said: "Not at this time."