IG report released in the USA firings.

TPM:

The IG report released today requests a special prosecutor to continue the work of the investigation into whether the nine U.S. attorneys removed in 2006 were fired for partisan political reasons.

From page 357 and 358 of the IG report:

The most serious allegation that we were not able to fully investigate related to the removal of David Iglesias, the U.S. Attorney for New Mexico, and the allegation that he was removed to influence voter fraud and public corruption prosecutions. We recommend that a counsel specially appointed by the Attorney General assess the facts we have uncovered, work with us to conduct further investigation, and ultimately determine whether the evidence demonstrates that any criminal offense was committed with regard to the removal of Iglesias or any other U.S. Attorney, or the testimony of any witness related to the U.S. Attorney removals.

Update: The report also describes the stonewalling the investigation received in trying to gather information on the removals. Specifically, it mentions a "fact memo" created for Alberto Gonzales by the DOJ's Office of Legal Counsel, which outlined the events chronologically, using a draft written by Michael Scudder, associate White House Counsel. Investigators were refused the timeline by the OLC who claimed they were ordered not to release it by the White House Counsel's office.From page 94 of the report:

We asked OLC for a copy of the memorandum and all the drafts, but OLC declined, stating that the White House Counsel's Office had directed OLC not to provide them to us. We thereafter engaged in discussions with the White House Counsel's Office during this investigation in an attempt to obtain the Scudder memorandum. The White House Counsel's Office agreed to read one paragraph of the memorandum to us, and provided us with two paragraphs of information concerning Rove that had already been reported publicly, but declined to provide any further information from the memorandum.

Eventually, the White House Counsel's Office provided us with a heavily redacted version of the document. We believe the refusal to provide us with an unredacted copy of this document hampered our investigation.

And there is more:

TPM:

The report concludes that Iglesias was removed as a result of complaints brought to DOJ by New Mexico GOP members of Congress and party activists, and shows that Karl Rove knew in advance of the decision. It reveals that at a meeting on November 15, 2006, Rep. Heather Wilson told Rove: "Mr. Rove, for what it's worth, the U.S. Attorney in New Mexico is a waste of breath." Rove's response: ""That decision has already been made. He's gone."

But it states that IG investigators were unable to determine how Rove knew this (Iglesias wasn't notifed until December 7), and what his possible role in the decision was, because Rove and White House counsel Harriet Miers refused to cooperate with the investigation.

Similarly, it notes that Kyle Sampson, who as chief of staff to Alberto Gonzales took the lead in bringing about the firings, gave "misleading after-the-fact explanations for why Iglesias was placed on the list." The report concludes: "[W]e question whether Sampson provided us the full story about Iglesias's placement on the list, as well as the reasons for other U.S. Attorney removals."

And: "Our investigation was also hindered by the refusal of Senator Domenici and his Chief of Staff to agree to an interview by us." (In April, Domenici, who is retiring this year, received a "qualified admonition" from the Senate ethics committee for his role in the firing.)

Mukasey appoints a Special Prosecutor:

Thinkprogress:

Therefore, I have asked Nora Dannehy to exercise the authority of the United States Attorney for the District of Columbia for purposes of this matter. In that capacity, Ms. Dannehy will report to me through the Deputy Attorney General.
According to the Washington Post, Mukasey’s decision to appoint a special prosecutor ensures “that the politically charged issue will extend into the next administration.”

Finally, here is an excerpt of the IG's report on the USA firings:

V. Conclusion

In sum, we believe that the process used to remove the nine U.S.
Attorneys in 2006 was fundamentally flawed. While Presidential appointees
can be removed for any reason or for no reason, as long as it is not an illegal or
improper reason, Department officials publicly justified the removals as the
result of an evaluation that sought to replace underperforming U.S. Attorneys.

In fact, we determined that the process implemented largely by Kyle Sampson,
Chief of Staff to the Attorney General, was unsystematic and arbitrary, with
little oversight by the Attorney General, the Deputy Attorney General, or any
other senior Department official. In choosing which U.S. Attorneys to remove,
Sampson did not adequately consult with the Department officials most
knowledgeable about their performance, or even examine formal evaluations of
each U.S. Attorney’s Office, despite his representations to the contrary.

We also determined that the U.S. Attorneys were not given an
opportunity to address concerns about their performance or provided the
reasons for their removal, which led to widespread speculation about the true
reasons for their removal, including that they were removed for improper
partisan political reasons. And to make matters worse, after the removals
became public the statements and congressional testimony provided by the
Attorney General, the Deputy Attorney General, Sampson, and other
Department officials about the reasons for the removals were inconsistent,
misleading, and inaccurate in many respects.

We believe the primary responsibility for these serious failures rest with
senior Department leaders – Attorney General Alberto Gonzales and Deputy
Attorney General Paul McNulty – who abdicated their responsibility to
adequately oversee the process and to ensure that the reasons for removal of
each U.S. Attorney were supportable and not improper. These removals were
not a minor personnel matter – they were an unprecedented removal of a group
of high-level Department officials that was certain to raise concerns if not
handled properly. Yet, neither the Attorney General nor the Deputy Attorney
General provided adequate oversight or supervision of this process. We also
concluded that Sampson bears significant responsibility for the flawed and
arbitrary removal process. Moreover, they and other Department officials are
responsible for failing to provide accurate and truthful statements about the
removals and their role in the process.