Former Rep. John Thune (R-S.D.) resigned Friday from his position as president of South Dakotans for Responsible Government, a 527 group he started just two months ago.

Thune’s decision to step down and suspend the group’s activity comes amid concerns that Thune’s status as a potential Senate candidate in 2004 ran afoul of the Bipartisan Campaign Reform Act’s ban on candidates for federal office raising soft money. Thune is considered a potential challenger to Sen. Tom Daschle (D-S.D.).

South Dakotans for a Responsible Majority, established under section 527 of the tax code, can accept unlimited soft-money donations and does not have to disclose its donors.

Thune’s Senate committee, which can only accept hard-money donations, spent $22,000 over the first three months of 2003 on some in-state travel, among other expenditures.

Those expenses raised the eyebrows of Democrats, who openly wondered whether Thune was still running a skeleton campaign through the committee while also heading the 527.

“John Thune has finally figured out that his soft-money organization was going nowhere fast and he began to look around for something else to do,” said Daschle campaign manager Steve Hildebrand.

Thune is now expected to play an informal role in President Bush’s re-election campaign, according to GOP sources.