** UPDATE II: A White House spokesperson is dismissing the quickly-developing notion that the administration was caught off guard by Gregg's announcement, saying, "We knew in advance." The official did not dispute that it was a "tight hold."

** UPDATE: Here's the White House's statement, from press secretary Robert Gibbs:

"Senator Gregg reached out to the President and offered his name for Secretary of Commerce. He was very clear throughout the interviewing process that despite past disagreements about policies, he would support, embrace, and move forward with the President's agenda. Once it became clear after his nomination that Senator Gregg was not going to be supporting some of President Obama's key economic priorities, it became necessary for Senator Gregg and the Obama administration to part ways. We regret that he has had a change of heart."

** EARLIER: The White House has no comment yet, as their second nominee for Secretary of Commerce has withdrawn. The New Hampshire Republican cites "irresolvable conflicts" over the stimulus plan and the Census. The White House had moved to take more direct control over the process, which in recent years has become a more political endeavor.

Here's the statement from Judd Gregg, who will now remain the senior senator from New Hampshire:

"I want to thank the President for nominating me to serve in his Cabinet as Secretary of Commerce. This was a great honor, and I had felt that I could bring some views and ideas that would assist him in governing during this difficult time. I especially admire his willingness to reach across the aisle.

"However, it has become apparent during this process that this will not work for me as I have found that on issues such as the stimulus package and the Census there are irresolvable conflicts for me. Prior to accepting this post, we had discussed these and other potential differences, but unfortunately we did not adequately focus on these concerns. We are functioning from a different set of views on many critical items of policy.

"Obviously the President requires a team that is fully supportive of all his initiatives.

"I greatly admire President Obama and know our country will benefit from his leadership, but at this time I must withdraw my name from consideration for this position.

"As we move forward, I expect there will be many issues and initiatives where I can and will work to assure the success of the President's proposals. This will certainly be a goal of mine.

"Kathy and I also want to specifically thank Governor Lynch and Bonnie Newman for their friendship and assistance during this period. In addition we wish to thank all the people, especially in New Hampshire, who have been so kind and generous in their supportive comments.

"As a further matter of clarification, nothing about the vetting process played any role in this decision. I will continue to represent the people of New Hampshire in the United States Senate."

UPDATE: Here is Senate Minority Leader Mitch McConnell's statement on Gregg returning to the Senate:

"Sen. Gregg made a principled decision to return and we're glad to have him. He is among the smartest, most effective legislators to serve in the Senate -- Democrat or Republican -- and a key advisor to me and to the Republican Conference. It's great to have him back."

UPDATE: Here is Senate Majority Leader Harry Reid's statement:

"I applaud President Obama for asking Sen. Judd Gregg to guide our nation's commerce at a critical time for our economy and for reaching across the aisle to include another Republican in his Cabinet. Senator Gregg has been a personal friend of mine for a long time, and I respect his decision. I look forward to continuing to work with him in the U.S. Senate to develop bipartisan solutions to the serious economic problems facing our nation."