When the Nevada Republican Central Committee met in Fallon last month, it was announced to the audience that Sen. John Ensign would not be able to attend as planned. But there was an unusual reaction from some in the crowd of party leaders and activists: applause.

The tongue-in-cheek ovation was followed by laughter, as Republicans know they have an awkward situation awaiting them in 2012. Ensign says he is running for re-election, despite spending much of the past year under the cloud of a federal investigation related to the extramarital affair he had with a former staffer. Many party insiders worry he could put the seat in jeopardy. 

After dropping the ball against vulnerable Senate Majority Leader Harry Reid last month, holding Ensign’s seat in two years has taken on even greater importance for Nevada Republicans.

“I think he’s going to have trouble,” said Republican National Committeewoman Heidi Smith, who was at the GOP gathering in Fallon. “Everybody is being very cagey right now, but I think that John Ensign is going to have a lot of competition.”

Ensign caught a bit of a break Wednesday, when his Senate office announced that the Department of Justice has dropped its investigation. But a separate Senate Ethics Committee investigation is ongoing. An Ensign spokeswoman said the Republican is “focused on earning back the trust of Nevadans.”

Smith said some activists have already set up political action committees targeting Ensign and that some “big-money groups” are strategizing against him.

Roll Call Politics rates this race as a Tossup.

The Republican most often mentioned as a strong challenger to Ensign is Rep. Dean Heller, who has been perhaps Ensign’s most vocal critic since the news of his affair broke last year. Heller was courted to challenge Reid by the National Republican Senatorial Committee. He opted against it, and some insiders thought Heller saw a clearer shot at the Senate in 2012.

Heller isn’t expected to announce his intentions until July, but insiders say that if Heller decides to run, there will be pressure on Ensign to retire.

“There will be a lot of people close to John Ensign asking him to call it a career if Dean does in fact jump in,” said Reno-based GOP consultant Robert Uithoven, who managed Sue Lowden’s Senate campaign this year.

Heller, who was just elected to a third term with 63 percent, represents the largest Congressional district in the country, not counting single-district states. It has been a safely Republican district, but with Nevada expected to gain a fourth House seat next year through reapportionment, it is unclear what any of the districts will look like. Democrats control the state’s legislative chambers, but the governor is a Republican.

Heller’s seat on the influential Ways and Means Committee could also factor into his decision about whether to run.

“Ways and Means is an important committee for us. He has a lot of power that can help us in the state,” said former Nevada first lady Dawn Gibbons, who is now communications director for NBC in Nevada. “If he chooses to leave that, I guess for Republicans our downfall could be we have Sharron Angle running. She’s been pretty good at winning primaries, but not good at winning generals.”

Angle told a northern Nevada newspaper last month that she was keeping her options open for 2012, and she specifically mentioned Heller’s district as a possibility, should he challenge Ensign. Angle ran for that seat in 2006, losing a close primary to Heller and to Gibbons, a former state Assemblywoman who finished third.

If Heller decides to stay in the House, the other names mentioned as potential Senate candidates include the same crowd that looked to challenge Reid in 2010: Angle, Danny Tarkanian, Wall Street investment banker John Chachas and Lt. Gov. Brian Krolicki. Tarkanian came in third in the summer primary that Angle won.

“All eyes are on Dean Heller,” Uithoven said. “I think that has consequences from the top of the ticket down to the Congressional races. He’s holding all the cards right now, not John Ensign.”

On the Democratic side, Rep. Shelley Berkley is giving strong consideration to running but will likely not make a decision until the Senate field becomes more defined. Should Berkley run, state Senate Majority Leader Steven Horsford has been mentioned as a potential candidate to run for her seat.

Some Democrats in the state expect her to run and think she would be a strong candidate against any Republican. Berkley has been a well-known figure in Las Vegas’ Clark County since the early 1980s, and she reported having nearly $1.2 million in the bank as of Nov. 22.  

“I will tell you Shelley Berkley is very popular in southern Nevada, so whoever wins that Republican primary is going to have a really tough race against her,” Gibbons said.

But other Republicans think Heller would easily defeat Berkley. “Dean Heller should pay her filing fee to run against Shelley Berkley. That’s how confident I am that he would beat her,” Uithoven said.

Part of the GOP’s worry is that 2012 is a presidential election year, and President Barack Obama won the state by 12 points in 2008. He did so despite winning just two counties — Clark and Washoe. Those are the state’s two population hubs, so if Democrats perform well there, they can win statewide.

Last month, Reid won those two counties as well, along with tiny Mineral County, defeating Angle by nearly 6 points.

Ensign’s troubles could worsen depending on the outcome of the Senate ethics investigation. According to the Las Vegas Review-Journal, Ensign told a local radio station that his legal bills could end up totaling “well over a million dollars.”

The second-term Senator has spent much of his campaign money on legal fees, though some insiders said money will not be a problem for Ensign, who comes from a wealthy family. The question will more likely be whether Republicans can stomach voting for him despite the scandal.

Smith said she had dinner with Ensign a couple of months ago, and he told her his biggest fear is that “women are still mad at him. And he’s absolutely right about that. But it’s not the sex as much as the money. I think that hits both genders.” 

Sen. David Vitter (R-La.) won re-election last month, three years after admitting “a very serious sin” in a public statement delivered alongside his wife. Gibbons stood by her then-husband, Jim Gibbons, as he ran for governor in 2006 amid allegations of sexual misconduct. She told Roll Call many Republicans will be watching Darlene Ensign to see if she forgives him.

“A lot of people can be forgiving if the wife is forgiving,” she said.

Meanwhile, Ensign’s voting record is admired at the grass-roots level, Uithoven said, “But we can’t have both our U.S. Senate seats represented by Democrats. We need to have our strongest candidate on the ticket.”