Ethics commissioner Neil Wilkinson, in a written judgment, said that while Peter Sandhu wanted changes to lien rules to benefit his home-building company, it was not a conflict of interest because other home-building companies would have benefited as well.
"Sandhu's persistence in this matter created an appearance of conflict of interest, but did not amount to an improper use of his office," wrote Wilkinson in the judgment.
"Had his persistence been directed at encouraging government officials to take action which only affected (Sandhu's) NewView Homes, there would be no doubt that it would be in breach of the (Conflicts of Interest) Act.
"But that is not the case, and there is therefore no actual breach."
Wilkinson also noted that the legislature is made up of people from diverse backgrounds and interests and that their work to lobby to make things better in their areas of expertise is to be encouraged.
"It's their job," wrote Wilkinson.
Sandhu, member of the legislature for Edmonton-Manning, stepped out from Premier Alison's Redford Progressive Conservative caucus when the issue surfaced in a CBC report on May 14.
A spokesman for his constituency office said he would not be commenting Thursday, although Sandhu did take to Facebook and Twitter to issue a statement.
"Thank you to constituents, family, friends and supporters, your support during this investigation was invaluable and gave me strength," he wrote.
Redford must now decide whether to bring Sandhu back into caucus.
Tory caucus whip Steve Young, in a written statement, said he was "encouraged" by the commissioner's findings.
"Caucus will consider any request by MLA Sandhu to be reinstated in caucus," Young said.
Both the NDP and Liberals said if Redford takes Sandhu back, she sends the message to her caucus that it's OK for her members to lobby, pitch and push for their own personal ends as long as they can make a case others might benefit, too.
"The message it sends to Albertans is: if you're a PC MLA, break all rules all you want and we'll make sure you don't even get slapped on the wrist," said Liberal Leader Raj Sherman.
NDP critic Dave Eggen said Redford needs to clarify immediately where her office and caucus stand on the member lobbying issue.
"This has left us in a bit of a vacuum that we don't want people to take advantage of," said Eggen.
At a dinner in central Alberta on Thursday night, Redford said she was pleased with the ruling and said it's important to respect decisions from the ethics commissioner.
"We've had an incredibly confusing year of political parties using independent offices of the legislature such as the ethics commissioner when they wanted to make a political point and then criticizing the office of the ethics commissioner when they didn't like the decision," she said.
Wildrose critic Shayne Saskiw said the decision shows that "PC MLAs are untouchable in this province.
"There are laws that apply to PC MLAs, and then there are laws that apply to everyone else."
Wilkinson noted that Sandhu had liens against his Edmonton-based NewView Homes company and, after being elected to the legislature in 2008, began lobbying politicians and bureaucrats to make changes to what he termed "vexatious" liens.
"Sandhu has raised the issue in committee and has had (fellow members of the legislature) ask questions of the (Service Alberta) minister in question period about the Builders' Lien Act," he wrote.
Wilkinson said Sandhu also buttonholed Service Alberta Minister Manmeet Bhullar and his staff in meetings to get the act reviewed to the point it raised questions about Sandhu's behaviour.
In one meeting on Feb. 17, 2012, Sandhu used an example of a lien filed against his own company as an example of "vexatious" liens that needed to be addressed.
"Several Service Alberta senior civil servants with whom member Sandhu met felt member Sandhu was inappropriately trying to use his office as a member to further the interest of his business venture, NewView," wrote Wilkinson.
Wilkinson noted that cabinet ministers and bureaucrats advised Sandhu "that if genuine issues existed with the Builders' Lien Act, the appropriate way to begin a review process was for significant stakeholders in the construction industry ... to come forward with evidence, proposals and a request to initiate a review."
Wilkinson said Sandhu was also "repeatedly advised" that what one party sees as vexatious, another may view as legitimate means to see its rights and interests enforced.
Wilkinson said Sandhu seemed to be acting alone.
"There is no evidence indicating there was any effort during this time by a significant element of any stakeholder group to initiate a review of the Builders' Lien Act."
In a second investigation, Wilkinson found that Sandhu did breach ethics rules when he failed to tell the legislature about six outstanding liens against him and NewView.
But Wilkinson ruled that Sandhu should not face punishment for the breaches.
He noted that Sandhu acted on poor advice from his lawyer and didn't disclose the liens because the cases were so close to being settled he didn't consider it necessary.
"There was no deliberate attempt to conceal actions for some underlying reason," Wilkinson wrote. "There was no malfeasance on the part of member Sandhu in any of these instances.
"Member Sandhu indicates he 'has learned his lesson.'"
-- with files from CKGY
Also on HuffPost