By MATTHEW DALY, Associated Press Writer

– 44 mins ago WASHINGTON –

Senate Finance Committee Chairman Max Baucus defended recommending his girlfriend for appointment as Montana's U.S. attorney, saying Saturday his one-time staff member and the former state prosecutor is "highly qualified" but eventually withdrew her nomination. Baucus said that he began dating former state office director Melodee Hanes after they were both separated from their spouses.

The Montana Democrat said they did not have an affair, but began dating while she worked for him. "As we grew closer and things progressed, we knew it was time to begin the process of Mel transitioning out of my Senate office," Baucus said in a statement issued by his office Saturday. He said he recommended Hanes to become Montana's U.S. attorney while they were dating because she is a highly qualified prosecutor who tried more than 100 jury trials and is widely regarded as an expert in child abuse prosecution.

"Mel would have been an excellent U.S. Attorney for Montana," said Baucus, 67. "I, for one, did not want her relationship with me to disqualify her from applying for the position." Baucus' office released a resume for Hanes, which listed her only federal court experience as handling personal injury and employment discrimination cases from 1982 to 1986 as a partner in a private Iowa law firm. All of Hanes' experience as a prosecutor came in state court, mostly in child abuse cases in Iowa and Montana, according to the resume. Hanes, 53, received prosecutor's training in 1994 at the FBI's National Law Institute in Quantico, Va., the resume states. Republican National Committee Chairman Michael Steele called Saturday for a Senate Ethics Committee investigation of Baucus' actions. Steele said the panel should determine "why Senator Baucus put his personal needs above those of the people of Montana."

Baucus, who is helping lead Democratic efforts to expand health care, recommended Hanes for the federal prosecutor job in February. He said he appointed an independent, third-party reviewer and established "an open and fair process" that resulted in her name and two others being sent, unranked, to the White House for consideration. But Hanes withdrew in March, saying she did so because she received other opportunities she couldn't pass up. Hanes was hired in June as a top official in the Justice Department's Office of Juvenile Justice and Delinquency Prevention. "We thought it made sense for her to withdraw her name from consideration," Baucus told reporters Saturday. "She also wanted to come back to Washington" to live with Baucus, which she now does. "Frankly we didn't want to live apart," Baucus said. Hanes received her Justice job after applying "independently," Baucus said. "Not surprisingly to anyone who's looked at her resume, (Hanes) got the DOJ job on her merit," he said. Baucus' office released details of his relationship with Hanes late Friday night in response to questions from Mainjustice.com, a news Web site covering the Justice Department that first reported the circumstances of Hanes' nomination.

Baucus has played a major role in managing the Democrats' health care overhaul efforts. He led Senate debate Saturday on the health bill, receiving a nod of support from Senate Majority Leader Harry Reid. "Max is a good friend, an outstanding senator and he has my full support," Reid, D-Nev., said in a statement released by his spokesman. Republican Sen. Lisa Murkowski of Alaska said she didn't think the issue would affect Baucus' leadership in the health care debate. "I don't think it's going to distract from the substance of the debate," she said. Baucus and his ex-wife Wanda announced last April that they planned to divorce after 25 years of marriage, his second. In a joint statement, they said they had "parted ways amicably and with mutual respect."

Hanes started working for Baucus in 2002 and was his state director before leaving his office for the Justice Department position. President Barack Obama eventually nominated Helena attorney Michael Cotter for the U.S. attorney post, which supervises prosecutors of all federal crimes committed in Montana and the state's seven Indian reservations. Cotter is awaiting Senate confirmation. Thomas Towe, a Billings, Mont., lawyer and former state lawmaker, said Hanes is highly regarded in the state's legal circles. Many lawyers in the state considered her to be a shoo-in for U.S. attorney, he said. Towe, a Democrat, said both Hanes and Baucus had acted honorably in acknowledging their relationship and withdrawing her name. "I think it hurt her career-wise. It would have been a good career move for her to be U.S. attorney," he said.