(The move appears to be a break for Graham, who may see potential Republican and Democratic challengers flock to the open seat instead of challenging him.)
The nature of the appointment process means it's anybody's guess as to who Haley will pick, but Republicans did catch a break by not having to defend the seat in a special election in mid-2013, as is the law in many other states.
Some names that are likely to be bandied about include Rep. Tim Scott (R-S.C.), who would become the only black senator and the first black Republican senator since the 1970s, and other Republicans in the state's House delegation, which includes Reps. Joe Wilson, Jeff Duncan, and Mick Mulvaney.
Haley could also pick a placeholder -- i.e. someone who doesn't intend to run for the seat in 2014 -- to avoid giving anyone a leg up for the open seat. That has been the case with many recent vacancies, including in Massachusetts, Illinois and Delaware after the 2008 election.