##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2010

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number 1-32940





LOGO

NUSTAR GP HOLDINGS, LLC

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 85-0470977                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)



|                                             |  |           
|-------------------------------------------- |  | ----------
|2330 North Loop 1604 West
San Antonio, Texas |  | 78248     
|(Address of principal executive offices)     |  | (Zip Code)

Registrants telephone number, including area code (210) 918-2000





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule12b-2 of the Exchange Act:



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  | x                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

The number of units outstanding as of May 1, 2010 was 42,547,294.









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##### Table of Contents

NUSTAR GP HOLDINGS, LLC AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS



|                               |  |                                                                                          |  |   
|------------------------------ |  | ---------------------------------------------------------------------------------------- |  | --
|PART I  FINANCIAL INFORMATION |  |                                                                                         
|                               |  |                                                                                         
|Item 1.                        |  | Financial Statements:                                                                    |  |   
|                               |  |                                                                                         
|                               |  | Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009                   |  | 3 
|                               |  |                                                                                         
|                               |  | Consolidated Statements of Income for the Three Months Ended March 31, 2010 and 2009     |  | 4 
|                               |  |                                                                                         
|                               |  | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009 |  | 5 
|                               |  |                                                                                         
|                               |  | Condensed Notes to Consolidated Financial Statements                                     |  | 6 
|                               |  |                                                                                         
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations    |  | 14
|                               |  |                                                                                         
|Item 4.                        |  | Controls and Procedures                                                                  |  | 19
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                         
|                               |  |                                                                                         
|Item 1.                        |  | Legal Proceedings                                                                        |  | 20
|                               |  |                                                                                         
|Item 6.                        |  | Exhibits                                                                                 |  | 20
|                               | 
|Signatures                     |  | 21                                                                                      



2



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

NUSTAR GP HOLDINGS, LLC

CONSOLIDATED BALANCE SHEETS

(Thousands of Dollars)



|                                                         |  |               |         |   |                  |   |         |  
|-------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                                         |  | March 31,2010 |         |   | December 31,2009 |  
|                                                         |  | (Unaudited)   |         |   |                  |  
|                                                         |  |              
|Assets                                                   |  |               |         |   |                  |   |         |  
|Current assets:                                          |  |               |         |   |                  |   |         |  
|Cash and cash equivalents                                |  | $             | 486     |   |                  | $ | 371     |  
|Receivable from NuStar Energy L.P.                       |  |               | 20,595  |   |                  |   | 10,639  |  
|Income tax receivable                                    |  |               | 6,993   |   |                  |   | 5,798   |  
|Other receivables                                        |  |               | 818     |   |                  |   | 795     |  
|Prepaid expenses                                         |  |               | 310     |   |                  |   | 353     |  
|Deferred income tax assets, net                          |  |               | 55      |   |                  |   | 1,198   |  
|                                                         |  |               |         |   |                  |   |         |  
|Total current assets                                     |  |               | 29,257  |   |                  |   | 19,154  |  
|                                                         |  |               |         |   |                  |   |         |  
|                                                         |  |              
|Investment in NuStar Energy L.P.                         |  |               | 547,326 |   |                  |   | 559,519 |  
|Long-term receivable from NuStar Energy L.P.             |  |               | 8,330   |   |                  |   | 7,663   |  
|Deferred income tax assets, net                          |  |               | 7,051   |   |                  |   | 6,923   |  
|                                                         |  |               |         |   |                  |   |         |  
|Total assets                                             |  | $             | 591,964 |   |                  | $ | 593,259 |  
|                                                         |  |               |         |   |                  |   |         |  
|                                                         |  |              
|Liabilities and Members Equity                          |  |               |         |   |                  |   |         |  
|                                                         |  |              
|Current liabilities:                                     |  |               |         |   |                  |   |         |  
|Short-term debt                                          |  | $             | 14,300  |   |                  | $ | 14,300  |  
|Accounts payable                                         |  |               | 621     |   |                  |   | 351     |  
|Accrued compensation expense                             |  |               | 20,401  |   |                  |   | 14,593  |  
|Accrued liabilities                                      |  |               | 585     |   |                  |   | 829     |  
|Taxes other than income tax                              |  |               | 285     |   |                  |   | 848     |  
|                                                         |  |               |         |   |                  |   |         |  
|Total current liabilities                                |  |               | 36,192  |   |                  |   | 30,921  |  
|                                                         |  |               |         |   |                  |   |         |  
|                                                         |  |              
|Employee benefit plan liabilities                        |  |               | 27,457  |   |                  |   | 24,130  |  
|Commitments and contingencies (Note 9)                   |  |               |         |   |                  |   |         |  
|                                                         |  |              
|Members equity                                          |  |               | 535,317 |   |                  |   | 545,200 |  
|Accumulated other comprehensive income:                  |  |               |         |   |                  |   |         |  
|Share of NuStar Energy L.P.s other comprehensive income |  |               | 1,292   |   |                  |   | 1,455   |  
|Pension adjustments, net of tax                          |  |               | (8,294  | ) |                  |   | (8,447  | )
|                                                         |  |               |         |   |                  |   |         |  
|Total accumulated other comprehensive loss               |  |               | (7,002  | ) |                  |   | (6,992  | )
|                                                         |  |               |         |   |                  |   |         |  
|Total members equity                                    |  |               | 528,315 |   |                  |   | 538,208 |  
|                                                         |  |               |         |   |                  |   |         |  
|Total liabilities and members equity                    |  | $             | 591,964 |   |                  | $ | 593,259 |  
|                                                         |  |               |         |   |                  |   |         |  

See Condensed Notes to Consolidated Financial Statements.



3



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NUSTAR GP HOLDINGS, LLC

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)



|                                                               |  |                              |            |   |      |   |            |  
|-------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                               |  | Three Months Ended March 31, |           
|                                                               |  | 2010                         |            |   | 2009 |  
|Equity in earnings of NuStar Energy L.P.                       |  | $                            | 9,301      |   |      | $ | 12,833     |  
|                                                               |  |                             
|General and administrative expenses                            |  |                              | (793       | ) |      |   | (757       | )
|Other income (expense), net                                    |  |                              | 125        |   |      |   | (24        | )
|Interest expense, net                                          |  |                              | (318       | ) |      |   | (27        | )
|                                                               |  |                              |            |   |      |   |            |  
|                                                               |  |                             
|Income before income tax benefit (expense)                     |  |                              | 8,315      |   |      |   | 12,025     |  
|Income tax benefit (expense)                                   |  |                              | 178        |   |      |   | (17        | )
|                                                               |  |                              |            |   |      |   |            |  
|Net income                                                     |  | $                            | 8,493      |   |      | $ | 12,008     |  
|                                                               |  |                              |            |   |      |   |            |  
|                                                               |  |                             
|Basic and diluted net income per unit                          |  | $                            | 0.20       |   |      | $ | 0.28       |  
|                                                               |  |                              |            |   |      |   |            |  
|                                                               |  |                             
|Weighted average number of basic and diluted units outstanding |  |                              | 42,514,494 |   |      |   | 42,503,784 |  
|                                                               |  |                              |            |   |      |   |            |  

See Condensed Notes to Consolidated Financial Statements.



4



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NUSTAR GP HOLDINGS, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, Thousands of Dollars)



|                                                                                         |  |                              |         |   |      |   |         |  
|---------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                         |  | Three Months Ended March 31, |        
|                                                                                         |  | 2010                         |         |   | 2009 |  
|Cash Flows from Operating Activities:                                                    |  |                              |         |   |      |   |         |  
|Net income                                                                               |  | $                            | 8,493   |   |      | $ | 12,008  |  
|Adjustments to reconcile net income to net cash provided by operating activities:        |  |                              |         |   |      |   |         |  
|Equity in earnings of NuStar Energy L.P.                                                 |  |                              | (9,301  | ) |      |   | (12,833 | )
|Distributions of equity in earnings from NuStar Energy L.P.                              |  |                              | 9,301   |   |      |   | 12,833  |  
|Provision (benefit) for deferred income tax                                              |  |                              | 1,015   |   |      |   | (985    | )
|Increase in employee benefit plan liabilities                                            |  |                              | 3,327   |   |      |   | 2,346   |  
|Changes in current assets and liabilities (Note 7)                                       |  |                              | (5,589  | ) |      |   | 674     |  
|Other, net                                                                               |  |                              | (792    | ) |      |   | 68      |  
|                                                                                         |  |                              |         |   |      |   |         |  
|Net cash provided by operating activities                                                |  |                              | 6,454   |   |      |   | 14,111  |  
|                                                                                         |  |                              |         |   |      |   |         |  
|                                                                                         |  |                             
|Cash Flows from Investing Activities:                                                    |  |                              |         |   |      |   |         |  
|Distributions in excess of equity in earnings from NuStar Energy L.P.                    |  |                              | 10,884  |   |      |   | 6,244   |  
|Proceeds from sale of NuStar Energy L.P. units in connection with employee benefit plans |  |                              | 1,271   |   |      |   | 348     |  
|                                                                                         |  |                              |         |   |      |   |         |  
|Net cash provided by investing activities                                                |  |                              | 12,155  |   |      |   | 6,592   |  
|                                                                                         |  |                              |         |   |      |   |         |  
|                                                                                         |  |                             
|Cash Flows from Financing Activities:                                                    |  |                              |         |   |      |   |         |  
|Distributions to unitholders                                                             |  |                              | (18,494 | ) |      |   | (18,277 | )
|                                                                                         |  |                              |         |   |      |   |         |  
|Net cash used in financing activities                                                    |  |                              | (18,494 | ) |      |   | (18,277 | )
|                                                                                         |  |                              |         |   |      |   |         |  
|                                                                                         |  |                             
|Net increase in cash and cash equivalents                                                |  |                              | 115     |   |      |   | 2,426   |  
|Cash and cash equivalents at the beginning of the period                                 |  |                              | 371     |   |      |   | 1,791   |  
|                                                                                         |  |                              |         |   |      |   |         |  
|Cash and cash equivalents at the end of the period                                       |  | $                            | 486     |   |      | $ | 4,217   |  
|                                                                                         |  |                              |         |   |      |   |         |  

See Condensed Notes to Consolidated Financial Statements.



5



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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization

NuStar GP Holdings,
LLC (NuStar GP Holdings) (NYSE: NSH) is a publicly held Delaware limited liability company. Unless otherwise indicated, the terms NuStar GP Holdings, we, our and us are used in this report to refer to
NuStar GP Holdings, LLC, to one or more of our consolidated subsidiaries or to all of them taken as a whole.

We have no operations or sources
of income or cash flows other than our investment in NuStar Energy L.P. (NuStar Energy) (NYSE: NS). As of March 31, 2010, we owned approximately 18.7% of NuStar Energy, consisting of the following:



| |  |  | the 2% general partner interest;
| | - |  | --------------------------------



| |  |  | 100% of the incentive distribution rights (IDR) issued by NuStar Energy, which entitle us to receive increasing percentages of the cash distributed by
NuStar Energy, currently at the maximum percentage of 23%; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 10,238,117 common units of NuStar Energy representing a 16.7% limited partner interest.
| | - |  | ---------------------------------------------------------------------------------------

NuStar Energy is a publicly held Delaware limited partnership engaged in the terminalling and storage of petroleum products, the transportation of
petroleum products and anhydrous ammonia, and asphalt and fuels marketing. NuStar Energy has terminal facilities in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom.

Basis of Presentation

These
unaudited consolidated financial statements include the accounts of NuStar GP Holdings and subsidiaries in which it has a controlling interest. Intercompany balances and transactions have been eliminated in consolidation.

We account for our ownership interest in NuStar Energy using the equity method. Therefore, our financial results reflect a portion of NuStar
Energys net income based on our ownership interest in NuStar Energy. We have no separate operating activities apart from those conducted by NuStar Energy and therefore generate no revenues from operations.

These unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (GAAP) for
interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by GAAP for complete
consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless otherwise indicated. Financial information
for the three months ended March 31, 2010 and 2009 included in these Condensed Notes to Consolidated Financial Statements is derived from our unaudited consolidated financial statements. Operating results for the three months ended
March 31, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. The consolidated balance sheet as of December 31, 2009 has been derived from the audited consolidated
financial statements as of that date. You should read these consolidated financial statements in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended
December 31, 2009.



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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



2. NEW ACCOUNTING PRONOUNCEMENTS

Fair Value Measurements

In
January 2010, the Financial Accounting Standards Board (FASB) issued additional guidance that requires new disclosures regarding significant transfers in and out of Level 1 and Level 2 fair value measurements and additional information on the roll
forward of Level 3 fair value measurements. This guidance also clarified the existing provisions on determining the appropriate classes of assets and liabilities to be reported and disclosures about the valuation techniques and inputs used to
measure fair value for both recurring and nonrecurring fair value measurements. This additional guidance is effective for interim and annual periods beginning after December 15, 2009, with the exception of the new requirements in the Level 3
roll forward, which will be effective for fiscal years beginning after December 15, 2010. We adopted these provisions effective January 1, 2010, and they did not have a material impact on our disclosures.

Variable Interest Entities

In
June 2009, the FASB amended certain requirements related to variable interest entities (VIEs), including the requirements for determining whether an entity is a VIE or the primary beneficiary of a VIE. In addition, the amended requirements include
additional disclosures about an entitys involvement with a VIE. We adopted the amended requirements on January 1, 2010 without any effect to our financial position or results of operations.

3. INVESTMENT IN NUSTAR ENERGY

Summary Financial Information

Condensed consolidated financial information reported by NuStar Energy is presented below (in thousands of dollars):



|                                       |  |                |           |                   |   |          
|-------------------------------------- |  | -------------- | --------- | ----------------- | - | ---------
|                                       |  | March 31, 2010 |           | December 31, 2009
|                                       |  | (Unaudited)    |           |                  
|Balance Sheet Information:             |  |                |           |                   |   |          
|Current assets                         |  | $              | 805,034   |                   | $ | 734,719  
|Property, plant and equipment, net     |  |                | 3,040,258 |                   |   | 3,028,196
|Goodwill                               |  |                | 807,742   |                   |   | 807,742  
|Other long-term assets, net            |  |                | 205,212   |                   |   | 204,016  
|                                       |  |                |           |                   |   |          
|Total assets                           |  | $              | 4,858,246 |                   | $ | 4,774,673
|                                       |  |                |           |                   |   |          
|                                       |  |               
|Current liabilities                    |  | $              | 407,732   |                   | $ | 338,754  
|Long-term debt, less current portion   |  |                | 1,897,337 |                   |   | 1,828,993
|Other long-term liabilities            |  |                | 122,847   |                   |   | 121,958  
|                                       |  |                |           |                   |   |          
|Total liabilities                      |  |                | 2,427,916 |                   |   | 2,289,705
|                                       |  |               
|Partners equity                       |  |                | 2,430,330 |                   |   | 2,484,968
|                                       |  |                |           |                   |   |          
|                                       |  |               
|Total liabilities and partners equity |  | $              | 4,858,246 |                   | $ | 4,774,673
|                                       |  |                |           |                   |   |          



|                                 |  |                             |         |      |   |        
|-------------------------------- |  | --------------------------- | ------- | ---- | - | -------
|                                 |  | Three Months EndedMarch 31,
|                                 |  | 2010                        |         | 2009
|                                 |  | (Thousands of Dollars)     
|Statement of Income Information: |  |                             |         |      |   |        
|Revenues                         |  | $                           | 945,529 |      | $ | 634,004
|Operating income                 |  |                             | 39,773  |      |   | 55,434 
|Net income                       |  |                             | 19,703  |      |   | 39,355 



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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



Other

Our investment in NuStar Energy reconciles to NuStar Energys total partners equity as follows:



|                                                                                                                |  |                        |           |   |                   |   |           |  
|--------------------------------------------------------------------------------------------------------------- |  | ---------------------- | --------- | - | ----------------- | - | --------- | -
|                                                                                                                |  | March 31, 2010         |           |   | December 31, 2009 |  
|                                                                                                                |  | (Thousands of Dollars) |          
|NuStar Energys total partners equity                                                                          |  | $                      | 2,430,330 |   |                   | $ | 2,484,968 |  
|NuStar GP Holdings ownership interest in NuStar Energy                                                         |  |                        | 18.7      | % |                   |   | 18.7      | %
|                                                                                                                |  |                        |           |   |                   |   |           |  
|NuStar GP Holdings share of NuStar Energys partners equity                                                   |  |                        | 454,472   |   |                   |   | 464,689   |  
|Step-up in basis related to NuStar Energys assets and liabilities, including equity method goodwill, and
other |  |                        | 92,854    |   |                   |   | 94,830    |  
|                                                                                                                |  |                        |           |   |                   |   |           |  
|Investment in NuStar Energy                                                                                     |  | $                      | 547,326   |   |                   | $ | 559,519   |  
|                                                                                                                |  |                        |           |   |                   |   |           |  

4. RELATED PARTY TRANSACTIONS

We had a receivable from NuStar Energy of $20.6 million and $10.6 million, as of March 31, 2010 and December 31, 2009, respectively,
relating to payroll, employee-related benefit plan expenses and unit-based compensation. We also had a long-term receivable of $8.3 million and $7.7 million from NuStar Energy as of March 31, 2010 and December 31, 2009, respectively,
related to amounts payable for retiree medical benefits and other post-employment benefits. The following table represents total related party transactions charged to NuStar Energy:



|                                                                                 |  |                             |        |      |   |       
|-------------------------------------------------------------------------------- |  | --------------------------- | ------ | ---- | - | ------
|                                                                                 |  | Three Months EndedMarch 31,
|                                                                                 |  | 2010                        |        | 2009
|                                                                                 |  | (Thousands of Dollars)     
|Expenses for payroll, employee-related benefit plans and unit-based compensation |  | $                           | 50,978 |      | $ | 45,547
|Other                                                                            |  |                             | 104    |      |   | 81    
|                                                                                 |  |                             |        |      |   |       
|Total related party transactions charged to NuStar Energy                        |  | $                           | 51,082 |      | $ | 45,628
|                                                                                 |  |                             |        |      |   |       

GP Services Agreement

NuStar Energy and NuStar GP, LLC, a wholly owned subsidiary of NuStar GP Holdings, entered into a services agreement, effective as of January 1, 2008
(the GP Services Agreement). The GP Services Agreement provides that NuStar GP, LLC will furnish administrative and certain operating services necessary to conduct the business of NuStar Energy. All employees providing services to both NuStar GP
Holdings and NuStar Energy are employed by NuStar GP, LLC; therefore, NuStar Energy reimburses NuStar GP, LLC for all employee costs, other than the expenses allocated to NuStar GP Holdings (the Holdco Administrative Services Expense).

Beginning with the 2009 fiscal year and for each fiscal year thereafter, the Holdco Administrative Services Expense totals $1.1 million plus 1.0% of
NuStar GP, LLCs domestic bonus and unit compensation expense, subject to certain other adjustments. The GP Services Agreement will terminate on December 31, 2012, with automatic two-year renewals unless terminated by either party upon six
months prior written notice. The aggregate amounts of Holdco Administrative Services Expense we incurred were $0.4 million and $0.3 million for the three months ended March 31, 2010 and 2009, respectively.



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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



5. DISTRIBUTIONS FROM NUSTAR ENERGY

The following table reflects the allocation of NuStar Energys cash distributions earned for the periods indicated among its general and limited
partners:



|                                                           |  |                                              |        |      |   |       
|---------------------------------------------------------- |  | -------------------------------------------- | ------ | ---- | - | ------
|                                                           |  | Three Months EndedMarch 31,                 
|                                                           |  | 2010                                         |        | 2009
|                                                           |  | (Thousands of Dollars,
Except Per Unit Data)
|General partner interest                                   |  | $                                            | 1,467  |      | $ | 1,318 
|General partner incentive distribution                     |  |                                              | 7,799  |      |   | 6,929 
|                                                           |  |                                              |        |      |   |       
|Total general partner distribution                         |  |                                              | 9,266  |      |   | 8,247 
|Limited partner distribution                               |  |                                              | 10,905 |      |   | 10,830
|                                                           |  |                                              |        |      |   |       
|Total distributions to NuStar GP Holdings                  |  |                                              | 20,171 |      |   | 19,077
|Public unitholders distributions                          |  |                                              | 53,221 |      |   | 46,761
|                                                           |  |                                              |        |      |   |       
|Total cash distributions                                   |  | $                                            | 73,392 |      | $ | 65,838
|                                                           |  |                                              |        |      |   |       
|Cash distributions per unit applicable to limited partners |  | $                                            | 1.0650 |      | $ | 1.0575
|                                                           |  |                                              |        |      |   |       

In January 2010, NuStar Energy declared a quarterly cash distribution
of $1.065 which was paid on February 12, 2010 to unitholders of record on February 5, 2010. This distribution related to the fourth quarter of 2009 and totaled $73.4 million. In April 2010, NuStar Energy declared a quarterly cash
distribution of $1.065 per unit related to the first quarter of 2010. This distribution will be paid on May 14, 2010 to unitholders of record on May 7, 2010 and will total $73.4 million.

6. FAIR VALUE MEASUREMENTS

We segregate
the inputs used in measuring fair value into three levels: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly
observable; and Level 3, defined as unobservable inputs in which little or no market data exists.

The following liabilities are measured at
fair value on a recurring basis:



|                               |  |                        |        |         |   |         |  |       |   |  |   |       
|------------------------------ |  | ---------------------- | ------ | ------- | - | ------- |  | ----- | - |  | - | ------
|                               |  | March 31, 2010        
|                               |  | Level 1                |        | Level 2 |   | Level 3 |  | Total
|                               |  | (Thousands of Dollars)
|Accrued compensation expense:  |  |                        |        |         |   |         |  |       |   |  |   |       
|NuStar Energy restricted units |  | $                      | 11,565 |         | $ |        |  | $     |  |  | $ | 11,565
|NuStar Energy unit options     |  |                        |       |         |   | 6,765   |  |       |  |  |   | 6,765 
|                               |  |                        |        |         |   |         |  |       |   |  |   |       
|Total                          |  | $                      | 11,565 |         | $ | 6,765   |  | $     |  |  | $ | 18,330
|                               |  |                        |        |         |   |         |  |       |   |  |   |       
|                               | 
|                               |  | December 31, 2009     
|                               |  | Level 1                |        | Level 2 |   | Level 3 |  | Total
|                               |  | (Thousands of Dollars)
|Accrued compensation expense:  |  |                        |        |         |   |         |  |       |   |  |   |       
|NuStar Energy restricted units |  | $                      | 8,689  |         | $ |        |  | $     |  |  | $ | 8,689 
|NuStar Energy unit options     |  |                        |       |         |   | 5,418   |  |       |  |  |   | 5,418 
|                               |  |                        |        |         |   |         |  |       |   |  |   |       
|Total                          |  | $                      | 8,689  |         | $ | 5,418   |  | $     |  |  | $ | 14,107
|                               |  |                        |        |         |   |         |  |       |   |  |   |       



9



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##### Table of Contents

NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



The fair value of our accrued compensation expense for NuStar Energy restricted units is determined
using the NuStar Energy unit price at the reporting date. The fair value of our accrued compensation expense for NuStar Energy unit option grants is determined using the Black-Scholes option-pricing model on the reporting date based on the following
weighted-average assumptions:



|                            |  |               
|--------------------------- |  | --------------
|                            |  | March 31, 2010
|Expected life in years      |  | 6.2           
|Expected volatility         |  | 48.6%         
|Expected distribution yield |  | 7.1%          
|Risk-free interest rate     |  | 0.9%          

7. STATEMENTS OF CASH
FLOWS

Changes in current assets and liabilities were as follows:



|                                            |  |                             |        |   |      |   |        |  
|------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                            |  | Three Months EndedMarch 31, |       
|                                            |  | 2010                        |        |   | 2009 |  
|                                            |  | (Thousands of Dollars)      |       
|Decrease (increase) in current assets:      |  |                             |        |   |      |   |        |  
|Receivable from NuStar Energy               |  | $                           | (9,685 | ) |      | $ | (2,022 | )
|Income tax receivable                       |  |                             | (1,195 | ) |      |   | 722    |  
|Other receivables                           |  |                             | (23    | ) |      |   | (1     | )
|Prepaid expenses                            |  |                             | 43     |   |      |   | 33     |  
|Increase (decrease) in current liabilities: |  |                             |        |   |      |   |        |  
|Accounts payable                            |  |                             | 270    |   |      |   | 60     |  
|Income tax payable                          |  |                             |       |   |      |   | 246    |  
|Accrued compensation expense                |  |                             | 5,808  |   |      |   | 2,294  |  
|Accrued liabilities                         |  |                             | (244   | ) |      |   | (219   | )
|Taxes other than income tax                 |  |                             | (563   | ) |      |   | (439   | )
|                                            |  |                             |        |   |      |   |        |  
|Changes in current assets and liabilities   |  | $                           | (5,589 | ) |      | $ | 674    |  
|                                            |  |                             |        |   |      |   |        |  

Cash flows related to interest and income tax were as follows:



|                         |  |                             |     |      |   |   
|------------------------ |  | --------------------------- | --- | ---- | - | --
|                         |  | Three Months EndedMarch 31,
|                         |  | 2010                        |     | 2009
|                         |  | (Thousands of Dollars)     
|Cash paid for interest   |  | $                           | 222 |      | $ | 29
|Cash paid for income tax |  | $                           | 2   |      | $ | 33

8. CREDIT FACILITY

Our revolving credit facility matures on July 16, 2010 and has a borrowing capacity of up to $19.5 million, of which, up to $10 million may be
available for letters of credit (Credit Facility). As of March 31, 2010, we had outstanding borrowings of $14.3 million and availability of $5.2 million for borrowings or letters of credit under the Credit Facility. Our Credit Facility bears
interest at an alternative base rate plus 3.5% or a LIBOR-based rate plus 4.5%, which was 4.8% as of March 31, 2010. The fair value of our Credit Facility approximates its carrying amount.

The terms of the Credit Facility require NuStar Energy to maintain a total debt-to-EBITDA ratio of less than 5.0-to-1.0 for any four consecutive
quarters, subject to adjustment following certain acquisitions, which was 4.5x as of March 31, 2010. We are also required to receive cash distributions of at least $25.0 million in respect of our ownership interests in NuStar Energy for
the preceding four fiscal quarters ending on the last day of each fiscal quarter. Our management believes that we are in compliance with the covenants as of March 31, 2010.

We are in discussions with the lenders to renew or replace our Credit Facility.



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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



9. COMMITMENTS AND CONTINGENCIES

Litigation and Environmental Matters

We are not currently a party to any material legal proceedings. However, NuStar Energy is subject to certain loss contingencies, the outcome of which
could have an effect on NuStar Energys results of operations and ability to pay distributions, which would impact our results of operations and ability to pay distributions. NuStar Energys material contingent liabilities resulting from
various litigation, claims and commitments are discussed below.

Grace Energy Corporation Matter.In 1997, Grace Energy Corporation
(Grace Energy) sued subsidiaries of Kaneb Pipe Line Partners, L.P. (KPP) and Kaneb Services LLC (KSL and, collectively with KPP and their respective subsidiaries, Kaneb) in Texas state court. The complaint sought recovery of the cost of remediation
of fuel leaks in the 1970s from a pipeline that had once connected a former Grace Energy terminal with Otis Air Force Base in Massachusetts (Otis AFB). Grace Energy alleges the Otis AFB pipeline and related environmental liabilities had been
transferred in 1978 to an entity that was part of Kanebs acquisition of Support Terminal Services, Inc. and its subsidiaries from Grace Energy in 1993. Kaneb contends that it did not acquire the Otis AFB pipeline and never assumed any
responsibility for any associated environmental damage.

In 2000, the court entered final judgment that: (i) Grace Energy could not
recover its own remediation costs of $3.5 million, (ii) Kaneb owned the Otis AFB pipeline and its related environmental liabilities and (iii) Grace Energy was awarded $1.8 million in attorney costs. Both Kaneb and Grace Energy appealed the
final judgment of the trial court to the Texas Court of Appeals in Dallas. In 2001, Grace Energy filed a petition in bankruptcy, which created an automatic stay of actions against Grace Energy. In September 2008, Grace Energy filed its Joint Plan of
Reorganization and Disclosure Statement.

The Otis AFB is a part of a Superfund Site pursuant to the Comprehensive Environmental Response
Compensation and Liability Act (CERCLA). The site contains a number of groundwater contamination plumes, two of which are allegedly associated with the Otis AFB pipeline. Relying on the final judgment of the Texas state court assigning ownership of
the Otis AFB pipeline to Kaneb, the U.S. Department of Justice (the DOJ) advised Kaneb in 2001 that it intends to seek reimbursement from Kaneb for the remediation costs associated with the two plumes. In November 2008, the DOJ forwarded information
to NuStar Energy indicating that the past and estimated future remediation expenses associated with one plume are $71.9 million. The DOJ has indicated that they will not seek recovery of remediation costs for the second plume. The DOJ has not filed
a lawsuit against NuStar Energy related to this matter and NuStar Energy has not made any payments toward costs incurred by the DOJ. NuStar Energy is currently in settlement discussions with other potentially responsible parties and the DOJ, and a
change in NuStar Energys estimate of this liability may occur in the near term. However, any settlement agreement that is reached must be approved by multiple parties and requires the approval of the bankruptcy court and the federal district
court. NuStar Energy cannot currently estimate when or if a settlement will be finalized.

Eres Matter. In August 2008, Eres N.V.
(Eres) forwarded a demand for arbitration to CITGO Asphalt Refining Company (CARCO), CITGO Petroleum Corporation (CITGO), NuStar Asphalt Refining, LLC (NuStar Asphalt) and NuStar Marketing LLC (NuStar Marketing, and together with CARCO, CITGO and
NuStar Asphalt, the Defendants) contending that the Defendants are in breach of a tanker voyage charter party agreement, dated November 2004, between Eres and CARCO (the Charter Agreement). The Charter Agreement provides for CARCOs use of
Eres vessels for the shipment of asphalt. Eres contends that NuStar Asphalt and/or NuStar Marketing (together, the NuStar Entities) assumed the Charter Agreement when NuStar Asphalt purchased the CARCO assets, and that the Defendants have
failed to perform under the Charter Agreement since January 1, 2008. Eres seeks to compel the Defendants to arbitrate a breach of contract claim in which Eres values its damages at approximately $78.1 million. CITGO and CARCO also contend that
the NuStar Entities assumed the Eres contract, and have demanded that the NuStar Entities defend and indemnify them against Eres claims. Eres motion to compel arbitration and CITGO and CARCOs indemnity claims are currently pending
in the U.S. District Court for the Southern District of Texas. NuStar Energy intends to vigorously defend against these claims.

Department
of Justice Matter.In February 2008, the DOJ advised NuStar Energy that the Environmental Protection Agency has requested that the DOJ initiate a lawsuit against NuStar Pipeline Operating Partnership L.P. (NuPOP) for (a) failing to prepare
adequate Facility Response Plans, as required by Section 311(j)(5) of the Clean Water Act, 33 U.S.C. §1321(j), for certain of its pipeline terminals located in Region VII, by August 30, 1994, and (b) maintaining



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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



Spill Prevention, Control and Countermeasure (SPCC) plans at the terminal that deviate from the SPCC regulations, 40 C.F.R. §112.3. A Facility Response Plan is a plan for responding to a
worst case discharge, and to a substantial threat of such a discharge, of oil or hazardous substances. The SPCC rule requires specific facilities to prepare, amend and implement plans to prevent, prepare and respond to oil discharges to navigable
waters and adjoining shorelines. NuStar Energy cooperated fully with the DOJs investigation, and all required Facility Response Plans are now in place. On March 18, 2010, the DOJ filed a consent decree in the U.S. District Court for the
District of Nebraska. Pursuant to the terms of the consent decree, NuStar Energy agreed to pay a penalty of $450,000 and implement a supplemental environmental project to install and operate tank monitoring and alarm systems at several of its
facilities. The consent decree was entered by the court in late April 2010. NuStar Energys payment is due in late May 2010.

Other

NuStar Energy is also a party to additional claims and legal proceedings arising in the ordinary course of its business. Due to the
inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on NuStar Energys results of operations, financial position or liquidity. It is
possible that if one or more of the matters described above were decided against NuStar Energy, the effects could be material to its results of operations in the period in which it would be required to record or adjust the related liability and
could also be material to its cash flows in the periods it would be required to pay such liability.

10. MEMBERS EQUITY AND NET
INCOME PER UNIT

The following table presents changes to our members equity (in thousands):



|                                                  |  |   |         |  
|------------------------------------------------- |  | - | ------- | -
|Balance as of December 31, 2009                   |  | $ | 538,208 |  
|Net income                                        |  |   | 8,493   |  
|Distributions to unitholders                      |  |   | (18,494 | )
|Share of NuStar Energys other comprehensive loss |  |   | (163    | )
|Unit-based compensation                           |  |   | 118     |  
|Other                                             |  |   | 153     |  
|                                                  |  |   |         |  
|Balance as of March 31, 2010                      |  | $ | 528,315 |  
|                                                  |  |   |         |  

Comprehensive Income

Our comprehensive income was as follows:



|                                                  |  |                              |       |   |      |   |        |  
|------------------------------------------------- |  | ---------------------------- | ----- | - | ---- | - | ------ | -
|                                                  |  | Three Months EndedMarch 
31, |      
|                                                  |  | 2010                         |       |   | 2009 |  
|                                                  |  | (Thousands of Dollars)       |      
|Net income                                        |  | $                            | 8,493 |   |      | $ | 12,008 |  
|Share of NuStar Energys other comprehensive loss |  |                              | (163  | ) |      |   | (1,222 | )
|Other                                             |  |                              | 153   |   |      |   | 28     |  
|                                                  |  |                              |       |   |      |   |        |  
|Comprehensive income                              |  | $                            | 8,483 |   |      | $ | 10,814 |  
|                                                  |  |                              |       |   |      |   |        |  

Net Income Per Unit

We include restricted units granted under our long-term incentive plan as participating securities in computing net income per unit pursuant to the
two-class method.

The computation of diluted net income per unit for the three months ended March 31, 2010 and 2009 excludes 324,100
outstanding options to purchase NuStar GP Holdings units, as the exercise price exceeded the market price and their effect would be anti-dilutive.



12



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##### Table of Contents

NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



Cash Distributions

The table set forth below shows our cash distributions applicable to the period in which the distributions were earned:



|                            |  |                                             |        |      |   |       
|--------------------------- |  | ------------------------------------------- | ------ | ---- | - | ------
|                            |  | Three Months EndedMarch 31,                
|                            |  | 2010                                        |        | 2009
|                            |  | (Thousands of Dollars,Except Per Unit Data)
|Cash distributions per unit |  | $                                           | 0.45   |      | $ | 0.43  
|Total cash distributions    |  | $                                           | 19,132 |      | $ | 18,277

In January 2010, our
board of directors declared a quarterly cash distribution of $0.435 per unit related to the fourth quarter of 2009. This distribution was paid on February 17, 2010 to unitholders of record on February 5, 2010 and totaled $18.5 million. In
April 2010, our board of directors declared a quarterly cash distribution of $0.450 per unit related to the first quarter of 2010. This distribution will be paid on May 19, 2010 to unitholders of record on May 7, 2010, and totals $19.1
million.

11. EMPLOYEE BENEFIT PLANS AND UNIT-BASED COMPENSATION

The components of net periodic benefit cost related to our defined benefit plans were as follows:



|                                         |  |                        |       |   |                                   |   |       |      |  |      |     |  |   |    
|---------------------------------------- |  | ---------------------- | ----- | - | --------------------------------- | - | ----- | ---- |  | ---- | --- |  | - | ---
|                                         |  | Pension Plans (a)      |       |   | Other PostretirementBenefit Plans
|                                         |  | 2010                   |       |   | 2009                              |   |       | 2010 |  | 2009
|                                         |  | (Thousands of Dollars)
|For the three months ended March 31:     |  |                        |       |   |                                   |   |       |      |  |      |     |  |   |    
|Components of net periodic benefit cost: |  |                        |       |   |                                   |   |       |      |  |      |     |  |   |    
|Service cost                             |  | $                      | 2,846 |   |                                   | $ | 2,039 |      |  | $    | 226 |  | $ | 167
|Interest cost                            |  |                        | 558   |   |                                   |   | 336   |      |  |      | 208 |  |   | 175
|Expected return on assets                |  |                        | (579  | ) |                                   |   | (400  | )    |  |      |    |  |   |   
|Amortization of net loss                 |  |                        | 132   |   |                                   |   | 28    |      |  |      | 21  |  |   |   
|                                         |  |                        |       |   |                                   |   |       |      |  |      |     |  |   |    
|Net periodic benefit cost                |  | $                      | 2,957 |   |                                   | $ | 2,003 |      |  | $    | 455 |  | $ | 342
|                                         |  |                        |       |   |                                   |   |       |      |  |      |     |  |   |    



|(a) | Includes amounts related to the pension plan, the excess pension plan and the supplemental executive retirement plan.
|--- | ---------------------------------------------------------------------------------------------------------------------



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

FORWARD-LOOKING STATEMENTS

This Form
10-Q contains certain estimates, predictions, projections, assumptions and other forward-looking statements that involve various risks and uncertainties. While these forward-looking statements, and any assumptions upon which they are based, are made
in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in
this report. These forward-looking statements can generally be identified by the words anticipates, believes, expects, plans, intends, estimates, forecasts,
budgets, projects, will, could, should, may and similar expressions. These statements reflect our current views with regard to future events and are subject to various risks,
uncertainties and assumptions. Please read our annual report on Form 10-K for the year ended December 31, 2009, Part I Risk Factors, for a discussion of certain of those risks, uncertainties and assumptions.

If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially
from those described in any forward-looking statement. Other unknown or unpredictable factors could also have material adverse effects on our future results. Readers are cautioned not to place undue reliance on this forward-looking information,
which is as of the date of this Form 10-Q. We do not intend to update these statements unless it is required by the securities laws to do so, and we undertake no obligation to publicly release the result of any revisions to any such forward-looking
statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

OVERVIEW

NuStar GP Holdings, LLC
(NuStar GP Holdings) (NYSE: NSH) is a publicly held Delaware limited liability company. Unless otherwise indicated, the terms NuStar GP Holdings, we, our and us are used in this report to refer to
NuStar GP Holdings, LLC, to one or more of our consolidated subsidiaries or to all of them taken as a whole.

Our only cash generating assets
are our ownership interests in NuStar Energy L.P. (NuStar Energy), a publicly held Delaware limited partnership (NYSE: NS). As of March 31, 2010, our aggregate ownership interests in NuStar Energy consisted of the following:



| |  |  | the 2% general partner interest;
| | - |  | --------------------------------



| |  |  | 100% of the incentive distribution rights (IDR) issued by NuStar Energy, which entitle us to receive increasing percentages of the cash distributed by
NuStar Energy, currently at the maximum percentage of 23%; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 10,238,117 common units of NuStar Energy representing a 16.7% limited partner interest.
| | - |  | ---------------------------------------------------------------------------------------

We account for our ownership interest in NuStar Energy using the equity method. Therefore, our financial results reflect a portion of NuStar
Energys net income based on our ownership interest. We have no separate operating activities apart from those conducted by NuStar Energy and therefore generate no revenues from operations.

NuStar Energy is engaged in the terminalling and storage of petroleum products, the transportation of petroleum products and anhydrous ammonia, and
asphalt and fuels marketing. NuStar Energy has terminal facilities in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom.

NuStar Energy is required by its partnership agreement to distribute all of its available cash at the end of each quarter, less reserves established by
its general partner, in its sole discretion, to provide for the proper conduct of NuStar Energys business. Similarly, we are required by our limited liability company agreement to distribute all of our available cash at the end of each
quarter, less reserves established by our board of directors.



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##### Table of Contents

RESULTS OF OPERATIONS

Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009

Financial Highlights

(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)



|                                                                      |  |                                                         |            |   |      |   |            |        |  |   |         |  
|--------------------------------------------------------------------- |  | ------------------------------------------------------- | ---------- | - | ---- | - | ---------- | ------ |  | - | ------- | -
|                                                                      |  | Three Months EndedMarch 31,                             |            |   |      |  
|                                                                      |  | 2010                                                    |            |   | 2009 |   |            | Change | 
|Equity in earnings of NuStar Energy                                   |  | $                                                       | 9,301      |   |      | $ | 12,833     |        |  | $ | (3,532  | )
|                                                                      |  |                                                         |           
|General and administrative expenses                                   |  |                                                         | (793       | ) |      |   | (757       | )      |  |   | (36     | )
|Other income (expense), net                                           |  |                                                         | 125        |   |      |   | (24        | )      |  |   | 149     |  
|Interest expense, net                                                 |  |                                                         | (318       | ) |      |   | (27        | )      |  |   | (291    | )
|                                                                      |  |                                                         |            |   |      |   |            |        |  |   |         |  
|                                                                      |  |                                                         |           
|Income before income tax benefit (expense)                            |  |                                                         | 8,315      |   |      |   | 12,025     |        |  |   | (3,710  | )
|Income tax benefit (expense)                                          |  |                                                         | 178        |   |      |   | (17        | )      |  |   | 195     |  
|                                                                      |  |                                                         |            |   |      |   |            |        |  |   |         |  
|Net income                                                            |  | $                                                       | 8,493      |   |      | $ | 12,008     |        |  | $ | (3,515  | )
|                                                                      |  |                                                         |            |   |      |   |            |        |  |   |         |  
|                                                                      |  |                                                         |           
|Basic and diluted net income per unit                                 |  | $                                                       | 0.20       |   |      | $ | 0.28       |        |  | $ | (0.08   | )
|                                                                      |  |                                                         |            |   |      |   |            |        |  |   |         |  
|                                                                      |  |                                                         |           
|Weighted average number of basic and diluted units outstanding        |  |                                                         | 42,514,494 |   |      |   | 42,503,784 |        |  |   | 10,710  |  
|                                                                      |  |                                                         |            |   |      |   |            |        |  |   |         |  
|                                                                      |  |                                                         |           
|The following table summarizes NuStar Energys results of operations: |  |                                                         |            |   |      |   |            |        |  |   |         |  
|                                                                      |  |                                                        
|                                                                      |  | Three Months EndedMarch 31,                             |            |   |      |  
|                                                                      |  | 2010                                                    |            |   | 2009 |   |            | Change | 
|                                                                      |  | (Unaudited, Thousands of Dollars, Except Per Unit Data) |           
|NuStar Energy Statement of Income Data:                               |  |                                                         |            |   |      |   |            |        |  |   |         |  
|Revenues                                                              |  | $                                                       | 945,529    |   |      | $ | 634,004    |        |  | $ | 311,525 |  
|Cost of product sales                                                 |  |                                                         | 719,221    |   |      |   | 416,795    |        |  |   | 302,426 |  
|Operating expenses                                                    |  |                                                         | 121,337    |   |      |   | 103,322    |        |  |   | 18,015  |  
|Depreciation and amortization expense                                 |  |                                                         | 36,459     |   |      |   | 34,863     |        |  |   | 1,596   |  
|                                                                      |  |                                                         |            |   |      |   |            |        |  |   |         |  
|Segment operating income                                              |  |                                                         | 68,512     |   |      |   | 79,024     |        |  |   | (10,512 | )
|General and administrative expenses                                   |  |                                                         | 27,269     |   |      |   | 22,464     |        |  |   | 4,805   |  
|Other depreciation and amortization expense                           |  |                                                         | 1,470      |   |      |   | 1,126      |        |  |   | 344     |  
|                                                                      |  |                                                         |            |   |      |   |            |        |  |   |         |  
|Operating income                                                      |  | $                                                       | 39,773     |   |      | $ | 55,434     |        |  | $ | (15,661 | )
|                                                                      |  |                                                         |            |   |      |   |            |        |  |   |         |  
|                                                                      |  |                                                         |           
|Net income                                                            |  | $                                                       | 19,703     |   |      | $ | 39,355     |        |  | $ | (19,652 | )
|Net income per unit applicable to limited partners                    |  | $                                                       | 0.19       |   |      | $ | 0.58       |        |  | $ | (0.39   | )
|Cash distributions per unit applicable to limited partners            |  | $                                                       | 1.0650     |   |      | $ | 1.0575     |        |  | $ | 0.0075  |  

NuStar Energys net income for
the three months ended March 31, 2010 decreased $19.7 million compared to the three months ended March 31, 2009, primarily due to decreases in segment operating income and other income, as well as an increase in general and administrative
expenses.



15



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##### Table of Contents

The following table summarizes our equity in earnings of NuStar Energy:



|                                                                                    |  |                             |       |   |      |   |        |        |  |   |        |  
|----------------------------------------------------------------------------------- |  | --------------------------- | ----- | - | ---- | - | ------ | ------ |  | - | ------ | -
|                                                                                    |  | Three Months EndedMarch 31, |       |   |      |  
|                                                                                    |  | 2010                        |       |   | 2009 |   |        | Change | 
|                                                                                    |  | (Thousands of Dollars)      |      
|NuStar GP Holdings Equity in Earnings of NuStar Energy:                            |  |                             |       |   |      |   |        |        |  |   |        |  
|General partner interest                                                            |  | $                           | 238   |   |      | $ | 649    |        |  | $ | (411   | )
|General partner incentive distribution                                              |  |                             | 7,799 |   |      |   | 6,929  |        |  |   | 870    |  
|                                                                                    |  |                             |       |   |      |   |        |        |  |   |        |  
|General partners interest in earnings and incentive distributions of NuStar Energy |  |                             | 8,037 |   |      |   | 7,578  |        |  |   | 459    |  
|Limited partner interest in earnings of NuStar Energy                               |  |                             | 1,985 |   |      |   | 5,976  |        |  |   | (3,991 | )
|Amortization of step-up in basis related to NuStar Energys assets and liabilities  |  |                             | (721  | ) |      |   | (721   | )      |  |   |       |  
|                                                                                    |  |                             |       |   |      |   |        |        |  |   |        |  
|Equity in earnings of NuStar Energy                                                 |  | $                           | 9,301 |   |      | $ | 12,833 |        |  | $ | (3,532 | )
|                                                                                    |  |                             |       |   |      |   |        |        |  |   |        |  

Our equity in earnings related to our general and limited partner interests in NuStar Energy decreased for the three months
ended March 31, 2010, compared to the three months ended March 31, 2009, due to a decrease in NuStar Energys net income.

NuStar Energys per unit distributions for the three months ended March 31, 2010, increased compared to the three months ended March 31,
2009, to $1.0650 from $1.0575. That increase, coupled with an increase in the number of NuStar Energy units outstanding resulting from the issuance of units in the fourth quarter of 2009, resulted in NuStar Energy increasing its total cash
distributions. Since our IDR in NuStar Energy entitle us to an increasing amount of NuStar Energys cash distributions, our equity in earnings of NuStar Energy related to our IDR increased for the period.

OUTLOOK

Overall, NuStar Energy expects
its results for 2010 to improve compared to 2009, mainly in its storage and asphalt and fuels marketing segments. However, NuStar Energys outlook could change depending on the pace of the economic recovery, changes to refinery maintenance
schedules, the demand for asphalt, or other factors that affect overall demand for the products it stores, transports and sells.

NuStar
Energys Transportation Segment

NuStar Energy expects its transportation segment results for 2010 to be comparable to or slightly
lower than 2009. NuStar Energy forecasts that throughputs for 2010 will increase slightly over 2009, barring any major unplanned turnaround activity and excluding the effect of the sale of its pipelines in 2009. The tariffs on NuStar Energys
pipelines regulated by the Federal Energy Regulatory Commission, which adjust annually based upon changes in the producer price index, will likely decline slightly in July, when the annual adjustment takes effect. Even taking the tariff rate decline
into account, NuStar Energys overall tariff rate for 2010 should be slightly higher than 2009. If NuStar Energys throughputs increase or if the cost of natural gas increases, NuStar Energy would expect its power expenses to increase in
2010 compared to 2009.

NuStar Energys Storage Segment

For 2010, NuStar Energy expects its earnings for the storage segment to increase compared to 2009. NuStar Energy expects to benefit from a full
years contribution of terminal expansion projects completed in 2009 and from new internal growth projects, a portion of which should be completed in 2010. In addition, NuStar Energy expects to benefit from higher renewal rates.

NuStar Energys Asphalt and Fuels Marketing Segment

NuStar Energy expects the asphalt and fuels marketing segment results to increase in 2010 compared to 2009 in anticipation of a higher margin per barrel
and increased sales volumes in its asphalt operations. In addition, NuStar Energy expects an improving economy to boost sales in its fuels marketing operations.

We expect our equity in earnings of NuStar Energy to increase or decrease consistent with NuStar Energys earnings.



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LIQUIDITY AND CAPITAL RESOURCES

General

Our cash flows consist of
distributions from NuStar Energy on our partnership interests, including all of the IDR that we own. Due to our ownership of NuStar Energys IDR, our portion of NuStar Energys total distributions may exceed our ownership interest in
NuStar Energy. Our primary cash requirements are for distributions to members, capital contributions to maintain our 2% general partner interest in NuStar Energy in the event NuStar Energy issues additional units, debt service requirements, if any,
benefit plan funding and general and administrative expenses. In addition, because NuStar GP, LLC, a wholly owned subsidiary of NuStar GP Holdings, elected to be treated as a taxable entity in August 2006, we may be required to pay income taxes,
which may exceed the amount of tax expense recorded in the consolidated financial statements. We expect to fund our cash requirements primarily with the quarterly cash distributions we receive from NuStar Energy and borrowings under our revolving
credit facility, if necessary. Additionally, NuStar Energy reimburses us for all costs incurred on their behalf, primarily employee-related costs.

Cash Distributions from NuStar Energy

NuStar Energy pays quarterly distributions within 45 days following the end of each quarter based on the partnership interests outstanding as of a record
date that is set after the end of each quarter. The table set forth below shows the cash distributions earned for the periods shown with respect to our ownership interests in NuStar Energy and IDR:



|                                                                |  |                                             |        |   |      |   |        |  
|--------------------------------------------------------------- |  | ------------------------------------------- | ------ | - | ---- | - | ------ | -
|                                                                |  | Three Months EndedMarch 31,                 |       
|                                                                |  | 2010                                        |        |   | 2009 |  
|                                                                |  | (Thousands of Dollars,Except Per Unit Data) |       
|Cash distributions per unit                                     |  | $                                           | 1.0650 |   |      | $ | 1.0575 |  
|Total cash distributions by NuStar Energy to all partners       |  | $                                           | 73,392 |   |      | $ | 65,838 |  
|                                                                |  |                                            
|Cash distributions we received from NuStar Energy:              |  |                                             |        |   |      |   |        |  
|Distributions on our general partner interest                   |  | $                                           | 1,467  |   |      | $ | 1,318  |  
|Distributions on our IDR                                        |  |                                             | 7,799  |   |      |   | 6,929  |  
|Distributions on our limited partnership interests              |  |                                             | 10,905 |   |      |   | 10,830 |  
|                                                                |  |                                             |        |   |      |   |        |  
|Total cash distributions to us                                  |  | $                                           | 20,171 |   |      | $ | 19,077 |  
|                                                                |  |                                             |        |   |      |   |        |  
|Distributions to us as a percentage of total cash distributions |  |                                             | 27.5   | % |      |   | 29.0   | %

Cash Flows for the Three Months
Ended March 31, 2010 and 2009

Cash distributions received from NuStar Energy for the three months ended March 31, 2010 were
$20.2 million compared to $19.1 million for the three months ended March 31, 2009. The cash distributions we received were used principally to fund distributions to our unitholders totaling $18.5 million for the three months ended
March 31, 2010, compared to $18.3 million for the three months ended March 31, 2009.

Credit Facility

Our revolving credit facility matures on July 16, 2010 and has a borrowing capacity of up to $19.5 million, of which, up to $10 million may be
available for letters of credit (Credit Facility). As of March 31, 2010, we had outstanding borrowings of $14.3 million and availability of $5.2 million for borrowings or letters of credit under the Credit Facility. Our Credit Facility bears
interest at an alternative base rate plus 3.5% or a LIBOR-based rate plus 4.5%, which was 4.8% as of March 31, 2010. The fair value of our Credit Facility approximates its carrying amount.

The terms of the Credit Facility require NuStar Energy to maintain a total debt-to-EBITDA ratio of less than 5.0-to-1.0 for any four consecutive
quarters, subject to adjustment following certain acquisitions, which was 4.5x as of March 31, 2010. We are also required to receive cash distributions of at least $25.0 million in respect of our ownership interests in NuStar Energy for
the preceding four fiscal quarters ending on the last day of each fiscal quarter. Our management believes that we are in compliance with the covenants as of March 31, 2010.

We are in discussions with the lenders to renew or replace our Credit Facility.



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Cash Distributions to Unitholders

Our limited liability company agreement requires that, within 50 days after the end of each quarter, we distribute all of our available cash to the
holders of record of our units on the applicable record date. The table set forth below shows our cash distributions applicable to the period in which the distributions were earned:



|                            |  |                                             |        |      |   |       
|--------------------------- |  | ------------------------------------------- | ------ | ---- | - | ------
|                            |  | Three Months EndedMarch 31,                
|                            |  | 2010                                        |        | 2009
|                            |  | (Thousands of Dollars,Except Per Unit Data)
|Cash distributions per unit |  | $                                           | 0.45   |      | $ | 0.43  
|Total cash distributions    |  | $                                           | 19,132 |      | $ | 18,277

Related Party
Transactions

NuStar Energy reimburses us for its share of costs incurred by us related to employee-related benefit plans and
unit-based compensation. Please refer to Note 4 of Condensed Notes to Consolidated Financial Statements for total related party transactions charged to and amounts due from NuStar Energy related to these and other transactions, and a description of
agreements.

Contingencies

As previously discussed, our only cash-generating assets are our indirect ownership interests in NuStar Energy. NuStar Energy is subject to certain loss
contingencies, the outcomes of which could have a material effect on NuStar Energys results of operations and cash flows. Please refer to Note 9 of Condensed Notes to Consolidated Financial Statements for a more detailed discussion of
contingencies.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Our critical accounting policies are disclosed in our Annual Report on Form 10-K for
the year ended December 31, 2009.



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##### Table of Contents

|Item 4. | Controls and Procedures
|------- | -----------------------



| | (a) | Evaluation of disclosure controls and procedures.Our management has evaluated, with the participation of our principal executive officer and principal financial
officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that our disclosure controls and
procedures were effective as of March 31, 2010.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Changes in internal control over financial reporting.There has been no change in our internal control over financial reporting that occurred during our last
fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

PART II - OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

The information below
describes new proceedings or material developments in proceedings that we previously reported in our annual report on Form 10-K for the year ended December 31, 2009.

Department of Justice Matter. In February 2008, the U.S. Department of Justice (DOJ) advised NuStar Energy that the U.S. Environmental Protection
Agency (the EPA) has requested that the DOJ initiate a lawsuit against NuStar Pipeline Operating Partnership L.P. (NuPOP) for (a) failing to prepare adequate Facility Response Plans, as required by Section 311(j)(5) of the Clean Water Act,
33 U.S.C. §1321(j), for certain of its pipeline terminals located in Region VII, by August 30, 1994, and (b) maintaining Spill Prevention, Control and Countermeasure (SPCC) plans at the terminal that deviate from the SPCC regulations,
40 C.F.R. §112.3. A Facility Response Plan is a plan for responding to a worst case discharge, and to a substantial threat of such a discharge, of oil or hazardous substances. The SPCC rule requires specific facilities to prepare, amend and
implement plans to prevent, prepare and respond to oil discharges to navigable waters and adjoining shorelines. NuStar Energy cooperated fully with the DOJs investigation, and all required Facility Response Plans are now in place. On
March 18, 2010, the DOJ filed a consent decree in the U.S. District Court for the District of Nebraska. Pursuant to the terms of the consent decree, NuStar Energy agreed to pay a penalty of $450,000 and implement a supplemental environmental
project to install and operate tank monitoring and alarm systems at several of its facilities. The consent decree was entered by the court in late April 2010. NuStar Energys payment is due in late May 2010.

Illinois EPA Matter.In September 2008, the Illinois State Attorney Generals Office proposed penalties totaling $240,000 related to
contamination at a storage terminal in Chillicothe, Illinois that NuStar Energy previously owned through a joint venture with Center Oil Company until NuStar Energy sold its interest in October 2006. On March 9, 2010, a consent order was
entered in the Circuit Court for the 10th Judicial Circuit Peoria County, Illinois. Pursuant to the terms of the consent order, NuStar Energy agreed to pay a penalty of $133,000 and continue with ongoing remediation efforts. This penalty was paid on
March 24, 2010.

EPA Investigation - Baltimore, Maryland facility. In September 2009, an administrative complaint was filed by the
EPA in Region III against NuStar Terminals Operations Partnership, L.P. (NTOP) and NuStar Terminals Services, Inc. (NTS). The administrative complaint alleges that certain violations occurred at NTOPs Baltimore, Maryland terminal facility. The
alleged violations include failure to comply with certain discharge limitations and certain monitoring and reporting obligations, as required by Section 301 of the Clean Water Act, 33 U.S.C. § 1311. The administrative complaint further
alleges that NTOP and NTS violated certain provisions of the Code of Maryland Regulations, which the EPA is entitled to enforce on behalf of the State of Maryland pursuant to Section 3008(a) of the Resource Conservation and Recovery Act, 42
U.S.C. § 6928(a). The total civil penalty sought by the EPA is $199,400. NuStar Energy is currently in settlement negotiations with the EPA regarding this matter.



|Item 6. | Exhibits
|------- | --------



|               |  |                                                                                                    
|-------------- |  | ---------------------------------------------------------------------------------------------------
|*Exhibit 31.01 |  | Rule 13a-14(a) Certifications (under Section 302 of the Sarbanes-Oxley Act of 2002).               
|               | 
|*Exhibit 32.01 |  | Section 1350 Certifications (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).



|* | Filed herewith.
|- | ---------------

|+ | Identifies management contracts or compensatory plans or arrangements required to be filed as an exhibit hereto.
|- | ----------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



|                        |  |                                      
|----------------------- |  | -------------------------------------
|NUSTAR GP HOLDINGS, LLC
|(Registrant)           
|                        | 
|By:                     |  | /s/ Curtis V. Anastasio              
|                        |  | Curtis V. Anastasio                  
|                        |  | President and Chief Executive Officer
|                        |  | May 6, 2010                          



|    |  |                                                             
|--- |  | ------------------------------------------------------------
|    | 
|By: |  | /s/ Steven A. Blank                                         
|    |  | Steven A. Blank                                             
|    |  | Senior Vice President, Chief Financial Officer and Treasurer
|    |  | May 6, 2010                                                 



|    |  |                              
|--- |  | -----------------------------
|    | 
|By: |  | /s/ Thomas R. Shoaf          
|    |  | Thomas R. Shoaf              
|    |  | Vice President and Controller
|    |  | May 6, 2010                  



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