##### 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, 2009

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





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

(Address of principal executive offices)

78248

(Zip Code)

Telephone number: (210) 918-2000

(Registrants telephone number, including area code)





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 (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|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, 2009 was 42,548,871.









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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, 2009 and December 31, 2008                   |  | 3 
|                               |  |                                                                                         
|                               |  | Consolidated Statements of Income for the Three Months Ended March 31, 2009 and 2008     |  | 4 
|                               |  |                                                                                         
|                               |  | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and 2008 |  | 5 
|                               |  |                                                                                         
|                               |  | Condensed Notes to Consolidated Financial Statements                                     |  | 6 
|                               |  |                                                                                         
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations    |  | 15
|                               |  |                                                                                         
|Item 4.                        |  | Controls and Procedures                                                                  |  | 21
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                         
|                               |  |                                                                                         
|Item 1.                        |  | Legal Proceedings                                                                        |  | 22
|                               |  |                                                                                         
|Item 6.                        |  | Exhibits                                                                                 |  | 23
|                               | 
|Signatures                     |  | 24                                                                                      



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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 31,2009 |         |   | December 31,2008 |  
|                                                         |  | (Unaudited)   |         |   |                  |  
|Assets                                                   |  |               |         |   |                  |   |         |  
|Current assets:                                          |  |               |         |   |                  |   |         |  
|Cash and cash equivalents                                |  | $             | 4,217   |   |                  | $ | 1,791   |  
|Accounts receivable                                      |  |               | 772     |   |                  |   | 771     |  
|Receivable from NuStar Energy L.P.                       |  |               | 5,638   |   |                  |   | 3,441   |  
|Income tax receivable                                    |  |               |        |   |                  |   | 722     |  
|Prepaid expenses                                         |  |               | 186     |   |                  |   | 219     |  
|Deferred income tax assets, net                          |  |               | 2,804   |   |                  |   | 1,860   |  
|                                                         |  |               |         |   |                  |   |         |  
|Total current assets                                     |  |               | 13,617  |   |                  |   | 8,804   |  
|                                                         |  |               |         |   |                  |   |         |  
|                                                         |  |              
|Investment in NuStar Energy L.P.                         |  |               | 546,083 |   |                  |   | 553,921 |  
|Long-term receivable from NuStar Energy L.P.             |  |               | 6,629   |   |                  |   | 6,645   |  
|Deferred income tax assets, net                          |  |               | 3,504   |   |                  |   | 3,463   |  
|                                                         |  |               |         |   |                  |   |         |  
|Total assets                                             |  | $             | 569,833 |   |                  | $ | 572,833 |  
|                                                         |  |               |         |   |                  |   |         |  
|                                                         |  |              
|Liabilities and Members Equity                          |  |               |         |   |                  |   |         |  
|                                                         |  |              
|Current liabilities:                                     |  |               |         |   |                  |   |         |  
|Current portion of long-term debt                        |  | $             | 6,500   |   |                  | $ | 6,500   |  
|Accounts payable                                         |  |               | 400     |   |                  |   | 340     |  
|Income tax payable                                       |  |               | 246     |   |                  |   |        |  
|Accrued compensation expense                             |  |               | 8,739   |   |                  |   | 6,445   |  
|Accrued liabilities                                      |  |               | 508     |   |                  |   | 727     |  
|Taxes other than income taxes                            |  |               | 469     |   |                  |   | 908     |  
|                                                         |  |               |         |   |                  |   |         |  
|Total current liabilities                                |  |               | 16,862  |   |                  |   | 14,920  |  
|                                                         |  |               |         |   |                  |   |         |  
|                                                         |  |              
|Employee benefit plan liabilities                        |  |               | 16,809  |   |                  |   | 14,463  |  
|Commitments and contingencies (Note 9)                   |  |               |         |   |                  |   |         |  
|                                                         |  |              
|Members equity                                          |  |               | 543,142 |   |                  |   | 549,236 |  
|Accumulated other comprehensive income:                  |  |               |         |   |                  |   |         |  
|Share of NuStar Energy L.P.s other comprehensive income |  |               | (4,129  | ) |                  |   | (2,907  | )
|Pension adjustment, net of tax                           |  |               | (2,851  | ) |                  |   | (2,879  | )
|                                                         |  |               |         |   |                  |   |         |  
|Total accumulated other comprehensive income             |  |               | (6,980  | ) |                  |   | (5,786  | )
|                                                         |  |               |         |   |                  |   |         |  
|Total members equity                                    |  |               | 536,162 |   |                  |   | 543,450 |  
|                                                         |  |               |         |   |                  |   |         |  
|Total liabilities and members equity                    |  | $             | 569,833 |   |                  | $ | 572,833 |  
|                                                         |  |               |         |   |                  |   |         |  

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, |           
|                                                               |  | 2009                         |            |   | 2008 |  
|Equity in earnings of NuStar Energy L.P.                       |  | $                            | 12,833     |   |      | $ | 15,754     |  
|                                                               |  |                             
|General and administrative expenses                            |  |                              | (757       | ) |      |   | (742       | )
|Other expense, net                                             |  |                              | (24        | ) |      |   |           |  
|Interest expense, net                                          |  |                              | (27        | ) |      |   | (29        | )
|                                                               |  |                              |            |   |      |   |            |  
|                                                               |  |                             
|Income before income tax (expense) benefit                     |  |                              | 12,025     |   |      |   | 14,983     |  
|Income tax (expense) benefit                                   |  |                              | (17        | ) |      |   | 20         |  
|                                                               |  |                              |            |   |      |   |            |  
|Net income                                                     |  | $                            | 12,008     |   |      | $ | 15,003     |  
|                                                               |  |                              |            |   |      |   |            |  
|                                                               |  |                             
|Basic and diluted net income per unit                          |  | $                            | 0.28       |   |      | $ | 0.35       |  
|                                                               |  |                              |            |   |      |   |            |  
|                                                               |  |                             
|Weighted average number of basic and diluted units outstanding |  |                              | 42,503,784 |   |      |   | 42,500,990 |  
|                                                               |  |                              |            |   |      |   |            |  

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, |        
|                                                                                         |  | 2009                         |         |   | 2008 |  
|Cash Flows from Operating Activities:                                                    |  |                              |         |   |      |   |         |  
|Net income                                                                               |  | $                            | 12,008  |   |      | $ | 15,003  |  
|Adjustments to reconcile net income to net cash provided by operating activities:        |  |                              |         |   |      |   |         |  
|Equity in earnings of NuStar Energy L.P.                                                 |  |                              | (12,833 | ) |      |   | (15,754 | )
|Distributions of equity in earnings from NuStar Energy L.P.                              |  |                              | 12,833  |   |      |   | 15,754  |  
|Deferred income tax benefit                                                              |  |                              | (985    | ) |      |   | (376    | )
|Increase (decrease) in employee benefit plan liabilities                                 |  |                              | 2,346   |   |      |   | (410    | )
|Changes in current assets and liabilities (Note 7)                                       |  |                              | 674     |   |      |   | (1,724  | )
|Other, net                                                                               |  |                              | 68      |   |      |   | 1,661   |  
|                                                                                         |  |                              |         |   |      |   |         |  
|Net cash provided by operating activities                                                |  |                              | 14,111  |   |      |   | 14,154  |  
|                                                                                         |  |                              |         |   |      |   |         |  
|                                                                                         |  |                             
|Cash Flows from Investing Activities:                                                    |  |                              |         |   |      |   |         |  
|Distributions in excess of equity in earnings from NuStar Energy L.P.                    |  |                              | 6,244   |   |      |   | 600     |  
|Proceeds from sale of NuStar Energy L.P. units in connection with employee benefit plans |  |                              | 348     |   |      |   | 2       |  
|                                                                                         |  |                              |         |   |      |   |         |  
|Net cash provided by investing activities                                                |  |                              | 6,592   |   |      |   | 602     |  
|                                                                                         |  |                              |         |   |      |   |         |  
|                                                                                         |  |                             
|Cash Flows from Financing Activities:                                                    |  |                              |         |   |      |   |         |  
|Distributions to unitholders                                                             |  |                              | (18,277 | ) |      |   | (15,300 | )
|                                                                                         |  |                              |         |   |      |   |         |  
|Net cash used in financing activities                                                    |  |                              | (18,277 | ) |      |   | (15,300 | )
|                                                                                         |  |                              |         |   |      |   |         |  
|                                                                                         |  |                             
|Net increase (decrease) in cash and cash equivalents                                     |  |                              | 2,426   |   |      |   | (544    | )
|Cash and cash equivalents at the beginning of the period                                 |  |                              | 1,791   |   |      |   | 3,240   |  
|                                                                                         |  |                              |         |   |      |   |         |  
|Cash and cash equivalents at the end of the period                                       |  | $                            | 4,217   |   |      | $ | 2,696   |  
|                                                                                         |  |                              |         |   |      |   |         |  

See Condensed Notes to Consolidated Financial Statements.



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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, 2009, we owned approximately 20.4% 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
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 10,241,566 common units of NuStar Energy representing an 18.4% 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, 2009 and 2008 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, 2009 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2009.

The consolidated balance sheet as of December 31, 2008 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, 2008.



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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



2. NEW ACCOUNTING PRONOUNCEMENTS

FASB Staff Position FAS 107-1 and APB 28-1

In April 2009, the Financial Accounting Standards Board (FASB)
issued Staff Position FAS 107 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP FAS 107-1). FSP FAS 107-1 amends FASB Statement No. 107, Disclosures about Fair Value of Financial
Instruments and APB Opinion No. 28, Interim Financial Reporting to require disclosures of the fair value of financial instruments in annual and interim financial statements. The fair value of all financial instruments, whether
or not recognized at fair value in the balance sheet, should be disclosed, along with the related carrying value and methods and significant assumptions used to estimate the fair value. Retrospective application for comparative periods presented is
not required. FSP FAS 107-1 is effective for interim periods ending after June 15, 2009. Accordingly, we will not adopt the provision of FSP FAS 107-1 until the quarter ending June 30, 2009, and we do not expect FSP FAS 107-1 to have a
material impact on our disclosures.

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, 2009               |           | December 31, 2008
|                                       |  | (Unaudited)                  |           |                  
|Balance Sheet Information:             |  |                              |           |                   |   |          
|Current assets                         |  | $                            | 559,250   |                   | $ | 486,486  
|Property, plant and equipment, net     |  |                              | 2,923,965 |                   |   | 2,941,824
|Goodwill                               |  |                              | 808,261   |                   |   | 806,330  
|Other long-term assets, net            |  |                              | 213,652   |                   |   | 224,957  
|                                       |  |                              |           |                   |   |          
|Total assets                           |  | $                            | 4,505,128 |                   | $ | 4,459,597
|                                       |  |                              |           |                   |   |          
|                                       |  |                             
|Current liabilities                    |  | $                            | 297,438   |                   | $ | 252,024  
|Long-term debt, less current portion   |  |                              | 1,902,964 |                   |   | 1,872,015
|Other long-term liabilities            |  |                              | 130,212   |                   |   | 128,561  
|                                       |  |                              |           |                   |   |          
|Total liabilities                      |  |                              | 2,330,614 |                   |   | 2,252,600
|                                       |  |                             
|Partners equity                       |  |                              | 2,174,514 |                   |   | 2,206,997
|                                       |  |                              |           |                   |   |          
|Total liabilities and partners equity |  | $                            | 4,505,128 |                   | $ | 4,459,597
|                                       |  |                              |           |                   |   |          
|                                       | 
|                                       |  | Three Months Ended March 31,
|                                       |  | 2009                         |           | 2008             
|                                       |  | (Thousands of Dollars)      
|Statement of Income Information:       |  |                              |           |                   |   |          
|Revenues                               |  | $                            | 634,004   |                   | $ | 592,774  
|Operating income                       |  |                              | 55,434    |                   |   | 65,186   
|Net income                             |  |                              | 39,355    |                   |   | 55,869   



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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



Other

As
of March 31, 2009 and December 31, 2008, our investment in NuStar Energy reconciles to NuStar Energys total partners equity as follows:



|                                                                                                                |  |                        |           |   |                   |   |           |  
|--------------------------------------------------------------------------------------------------------------- |  | ---------------------- | --------- | - | ----------------- | - | --------- | -
|                                                                                                                |  | March 31, 2009         |           |   | December 31, 2008 |  
|                                                                                                                |  | (Thousands of Dollars) |          
|NuStar Energys total partners equity                                                                          |  | $                      | 2,174,514 |   |                   | $ | 2,206,997 |  
|NuStar GP Holdings ownership interest in NuStar Energy                                                         |  |                        | 20.4      | % |                   |   | 20.5      | %
|                                                                                                                |  |                        |           |   |                   |   |           |  
|NuStar GP Holdings share of NuStar Energys partners equity                                                   |  |                        | 443,601   |   |                   |   | 452,434   |  
|Step-up in basis related to NuStar Energys assets and liabilities, including equity method goodwill, and other |  |                        | 102,482   |   |                   |   | 101,487   |  
|                                                                                                                |  |                        |           |   |                   |   |           |  
|Investment in NuStar Energy                                                                                     |  | $                      | 546,083   |   |                   | $ | 553,921   |  
|                                                                                                                |  |                        |           |   |                   |   |           |  

4. RELATED PARTY TRANSACTIONS

We had a receivable from NuStar Energy of $5.6 million and $3.4 million, as of March 31, 2009 and December 31, 2008, respectively, with both amounts representing payroll and plan benefits, net of
payments made to us. We also had a long-term receivable of $6.6 million from NuStar Energy as of March 31, 2009 and December 31, 2008, related to amounts payable for retiree medical benefits and other post-employment benefits. We charged
NuStar Energy a net amount of $45.6 million and $34.1 million for the three months ended March 31, 2009 and 2008, respectively. These expenses primarily related to payroll and related benefit plans and for unit-based compensation.

GP Services Agreement

NuStar Energy and NuStar GP, LLC
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 all administrative 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 will reimburse NuStar GP, LLC for all employee costs, other than the expenses allocated to NuStar GP Holdings (the
Holdco Administrative Services Expense).

The Holdco Administrative Services Expense equals $1.1 million and $0.8 million for the fiscal years 2009 and
2008, respectively, 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 we incurred related to the GP Services Agreement were $0.3 million and $0.1 million for the three months ended March 31, 2009 and 2008, respectively.

5. DISTRIBUTIONS FROM NUSTAR ENERGY

NuStar
Energys partnership agreement, as amended, determines the amount and priority of cash distributions that NuStar Energys common unitholders and general partner may receive. We, as NuStar Energys general partner, are entitled to
incentive distributions if the amount NuStar Energy distributes with respect to any quarter exceeds $0.60 per unit, with the maximum percentage of 23% of the amount of any quarterly distribution in excess of $0.66 per unit. We also receive a 2%
distribution with respect to our general partner interest.



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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



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 Ended March 31,                
|                                                           |  | 2009                                         |        | 2008
|                                                           |  | (Thousands of Dollars, Except Per Unit Data)
|General partner interest                                   |  | $                                            | 1,318  |      | $ | 1,211 
|General partner incentive distribution                     |  |                                              | 6,929  |      |   | 5,718 
|                                                           |  |                                              |        |      |   |       
|Total general partner distribution                         |  |                                              | 8,247  |      |   | 6,929 
|Limited partner distribution                               |  |                                              | 10,830 |      |   | 10,067
|                                                           |  |                                              |        |      |   |       
|Total distributions to NuStar GP Holdings                  |  |                                              | 19,077 |      |   | 16,996
|Public unitholders distributions                          |  |                                              | 46,761 |      |   | 43,577
|                                                           |  |                                              |        |      |   |       
|Total cash distributions                                   |  | $                                            | 65,838 |      | $ | 60,573
|                                                           |  |                                              |        |      |   |       
|                                                           |  |                                             
|Cash distributions per unit applicable to limited partners |  | $                                            | 1.0575 |      | $ | 0.985 
|                                                           |  |                                              |        |      |   |       

In January 2009, NuStar Energy declared a quarterly cash distribution of $1.0575, which was paid on
February 12, 2009 to unitholders of record on February 5, 2009. This distribution related to the fourth quarter of 2008 and totaled $65.8 million. In April 2009, NuStar Energy declared a quarterly cash distribution of $1.0575 per unit
related to the first quarter of 2009. This distribution will be paid on May 15, 2009 to unitholders of record on May 8, 2009 and will total $65.8 million.

6. FAIR VALUE MEASUREMENTS

In September 2006, the FASB issued Statement No. 157, Fair Value
Measurements. Statement No. 157, as amended, defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measures. The FASB deferred the effective date of Statement
No. 157 for one year for all nonfinancial assets and liabilities, except for those items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We have applied the recognition and
disclosure provisions of Statement No. 157 for financial assets and liabilities and for nonfinancial assets and liabilities that are re-measured at least annually as of January 1, 2008.

We adopted the recognition and disclosure provisions of Statement No. 157 for nonfinancial assets and liabilities that are not recognized or disclosed at fair value
on a recurring basis on January 1, 2009. The adoption of these provisions did not affect our financial position or results of operations in the first quarter of 2009.

Statement No. 157 establishes a fair value hierarchy, which segregates 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.



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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



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



|                               |  |                        |       |         |   |         |  |       |   |  |   |      
|------------------------------ |  | ---------------------- | ----- | ------- | - | ------- |  | ----- | - |  | - | -----
|                               |  | March 31, 2009        
|                               |  | Level 1                |       | Level 2 |   | Level 3 |  | Total
|                               |  | (Thousands of Dollars)
|Accrued compensation expense:  |  |                        |       |         |   |         |  |       |   |  |   |      
|NuStar Energy restricted units |  | $                      | 5,927 |         | $ |        |  | $     |  |  | $ | 5,927
|NuStar Energy unit options     |  |                        |      |         |   | 2,697   |  |       |  |  |   | 2,697
|                               |  |                        |       |         |   |         |  |       |   |  |   |      
|Total                          |  | $                      | 5,927 |         | $ | 2,697   |  | $     |  |  | $ | 8,624
|                               |  |                        |       |         |   |         |  |       |   |  |   |      
|                               | 
|                               |  | December 31, 2008     
|                               |  | Level 1                |       | Level 2 |   | Level 3 |  | Total
|                               |  | (Thousands of Dollars)
|Accrued compensation expense:  |  |                        |       |         |   |         |  |       |   |  |   |      
|NuStar Energy restricted units |  | $                      | 4,486 |         | $ |        |  | $     |  |  | $ | 4,486
|NuStar Energy unit options     |  |                        |      |         |   | 1,556   |  |       |  |  |   | 1,556
|                               |  |                        |       |         |   |         |  |       |   |  |   |      
|Total                          |  | $                      | 4,486 |         | $ | 1,556   |  | $     |  |  | $ | 6,042
|                               |  |                        |       |         |   |         |  |       |   |  |   |      

The fair value of our liability for NuStar Energy restricted units is determined using the NuStar Energy unit
price at the reporting date. The fair value of our liability for NuStar Energy unit option grants is determined using the Black-Scholes option-pricing model on the reporting date based on the expected life of options granted, expected volatility,
expected dividend yield and the risk-free interest rate.

7. STATEMENTS OF CASH FLOWS

Changes in current assets and liabilities were as follows:



|                                            |  |                              |        |   |      |   |        |  
|------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                            |  | Three Months Ended March 31, |       
|                                            |  | 2009                         |        |   | 2008 |  
|                                            |  | (Thousands of Dollars)       |       
|Decrease (increase) in current assets:      |  |                              |        |   |      |   |        |  
|Accounts receivable                         |  | $                            | (1     | ) |      | $ | (546   | )
|Receivable from NuStar Energy               |  |                              | (2,022 | ) |      |   | (601   | )
|Income tax receivable                       |  |                              | 722    |   |      |   | 356    |  
|Prepaid expenses                            |  |                              | 33     |   |      |   | (24    | )
|Increase (decrease) in current liabilities: |  |                              |        |   |      |   |        |  
|Accounts payable                            |  |                              | 60     |   |      |   | 96     |  
|Payable to NuStar Energy                    |  |                              |       |   |      |   | (786   | )
|Income tax payable                          |  |                              | 246    |   |      |   |       |  
|Accrued compensation expense                |  |                              | 2,294  |   |      |   | 1,017  |  
|Accrued liabilities                         |  |                              | (219   | ) |      |   | (305   | )
|Taxes other than income taxes               |  |                              | (439   | ) |      |   | (931   | )
|                                            |  |                              |        |   |      |   |        |  
|Changes in current assets and liabilities   |  | $                            | 674    |   |      | $ | (1,724 | )
|                                            |  |                              |        |   |      |   |        |  

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



|                           |  |                              |    |      |   |   
|-------------------------- |  | ---------------------------- | -- | ---- | - | --
|                           |  | Three Months Ended March 31,
|                           |  | 2009                         |    | 2008
|                           |  | (Thousands of Dollars)      
|Cash paid for interest     |  | $                            | 29 |      | $ | 37
|Cash paid for income taxes |  |                              | 33 |      |   |  



10



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##### Table of Contents

NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



8. CREDIT FACILITY

Our three-year revolving credit facility matures on July 19, 2009 and has a borrowing capacity of up to $20 million (Credit Facility). We fund capital contributions to NuStar Energy to maintain our 2% general partner interest as NuStar
Energy issues additional units and meet other liquidity and capital resource requirements through borrowings under the Credit Facility.

Under the terms of
the Credit Facility, NuStar Energy must 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. We are also required to receive cash distributions of at
least $25.0 million in respect to 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, 2009.

As of March 31, 2009, we had outstanding borrowings of $6.5 million and availability of $13.5 million under the Credit Facility.
Borrowings under the Credit Facility bear interest, at our option, at either an alternative base rate or a LIBOR based rate, which was 1.1% as of March 31, 2009.

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

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.

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



11



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##### Table of Contents

NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



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 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. CARCO has demanded that
NuStar Asphalt and NuStar Marketing defend and indemnify it against Eres claims and has filed a lawsuit in the Harris County District Court, Harris County, Texas, seeking to recover on its indemnity claim. This lawsuit has been removed and is
currently pending in the U.S. District Court for the Southern District of Texas. In connection with the demand for arbitration, Eres filed a complaint in the U.S. District Court for the Southern District of New York (SDNY) seeking to require the
Defendants to arbitrate the dispute and seeking to attach the banking funds of CARCO and NuStar Asphalt (including cash, escrow funds, credits, debts, wire transfers, electronic funds transfers, accounts, letters of credit, freights and charter
hire) within the SDNY in amounts of approximately $78.1 million pending resolution of arbitration between Eres and the Defendants. This lawsuit has also been removed to and is currently pending in the U.S. District Court for the Southern District of
Texas. To date, no funds of NuStar Asphalt have been attached. NuStar Energy intends to vigorously defend against these claims.

Department of Justice
Matter.In February 2008, the 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 violations of the Clean
Water Act 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 is currently in settlement negotiations with the DOJ to resolve these matters.

EPA Investigation.In November 2006, agents of the EPA
presented a search warrant issued by a U.S. District Court at a terminal owned by Shore Terminals, LLC (Shore), a wholly owned subsidiary of NuPOP. Since then, NuStar Energy and Shore have been served with additional subpoenas. The search warrant
and subpoenas all sought information regarding allegations of potential illegal conduct by Shore, certain of its affiliates and/or its employees concerning compliance with certain environmental and safety laws and regulations. NuStar Energy has
cooperated fully with the U.S. Attorney and the EPA in producing documents in response to the subpoenas. Although the U.S. Attorney has indicated that they intend to seek criminal penalties and fines as a result of alleged violations of
environmental laws at the terminal, NuStar Energy is currently in negotiations with the U.S. Attorney and the EPA to resolve this matter. There can be no assurances that the conclusion of the U.S. Attorneys and the EPAs investigation
will not result in a determination that Shore violated applicable laws. If Shore is found to have violated such laws, NuStar Energy could be subject to fines, civil penalties and criminal penalties. A final determination that Shore violated
applicable laws could, among other things, result in debarment from future federal government contracts.

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, 2008                   |  | $ | 543,450 |  
|Net income                                        |  |   | 12,008  |  
|Distributions to unitholders                      |  |   | (18,277 | )
|Share of NuStar Energys other comprehensive loss |  |   | (1,222  | )
|Unit-based compensation                           |  |   | 175     |  
|Other                                             |  |   | 28      |  
|                                                  |  |   |         |  
|Balance as of March 31, 2009                      |  | $ | 536,162 |  
|                                                  |  |   |         |  



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##### Table of Contents

NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



Comprehensive Income

For the three months ended March 31, 2009 and 2008, the difference between our net income and our comprehensive income resulted mainly from our proportionate share of NuStar Energys other comprehensive
income. Our total comprehensive income was as follows:



|                                                  |  |                              |        |   |      |   |        |  
|------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                                  |  | Three Months Ended March 31, |       
|                                                  |  | 2009                         |        |   | 2008 |  
|                                                  |  | (Thousands of Dollars)       |       
|Net income                                        |  | $                            | 12,008 |   |      | $ | 15,003 |  
|Share of NuStar Energys other comprehensive loss |  |                              | (1,222 | ) |      |   | (730   | )
|Other                                             |  |                              | 28     |   |      |   | 4      |  
|                                                  |  |                              |        |   |      |   |        |  
|Comprehensive income                              |  | $                            | 10,814 |   |      | $ | 14,277 |  
|                                                  |  |                              |        |   |      |   |        |  

Net Income Per Unit

In June 2008, the FASB issued Staff Position No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (EITF 03-6-1). According to EITF
03-6-1, unvested share-based payment awards are considered participating securities if they contain nonforfeitable rights to dividends or dividend equivalents and are therefore included in the earnings allocation in computing basic earnings per
share pursuant to the two-class method. Therefore, restricted units granted under the NuStar GP Holdings 2006 Long-Term Incentive Plan are considered participating securities as they contain nonforfeitable rights to distributions. We adopted EITF
03-6-1 effective January 1, 2009 and the effect is not material.

The computation of diluted net income per unit for the three months ended
March 31, 2009 and 2008 excludes 324,100 outstanding options to purchase NuStar GP Holdings units, as the exercise price is above market and their effect would be anti-dilutive.

Cash Distributions

In January 2009, our board of directors declared a quarterly cash distribution of $0.43
per unit related to the fourth quarter of 2008. This distribution was paid on February 17, 2009 to unitholders of record on February 5, 2009 and totaled $18.3 million. In April 2009, our board of directors declared a quarterly cash
distribution of $0.43 per unit related to the first quarter of 2009. This distribution will be paid on May 20, 2009 to unitholders of record on May 8, 2009 and will total $18.3 million.

11. EMPLOYEE BENEFIT PLANS AND UNIT BASED COMPENSATION

NuStar Energy
reimburses us for its share of costs incurred by us related to employee benefit plans and long-term incentive plans. Expenses resulting from NuStar GP Holdings awards to our non-employee directors are included in General and administrative
expenses on our consolidated statements of income. Our liabilities for employee benefits are included in Employee benefit plan liabilities and our liability related to the long-term incentive plans is included in Accrued
compensation expense on our consolidated balance sheets.



13



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##### Table of Contents

NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)



The following table summarizes information pertaining to employee benefit plan and long-term incentive plan
compensation expenses:



|                                                                            |  |                              |        |      |   |       
|--------------------------------------------------------------------------- |  | ---------------------------- | ------ | ---- | - | ------
|                                                                            |  | Three Months Ended March 31,
|                                                                            |  | 2009                         |        | 2008
|                                                                            |  | (Thousands of Dollars)      
|Expenses for payroll and related benefit plans charged to NuStar Energy     |  | $                            | 42,511 |      | $ | 33,933
|Long-term incentive plan compensation expense charged to NuStar Energy      |  |                              | 3,281  |      |   | 271   
|Expenses resulting from NuStar GP Holdings awards to non-employee directors |  |                              |       |      |   | 192   

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



|                                         |  |                        |       |   |                                   |   |       |      |  |      |     |  |   |    
|---------------------------------------- |  | ---------------------- | ----- | - | --------------------------------- | - | ----- | ---- |  | ---- | --- |  | - | ---
|                                         |  | Pension Plans (a)      |       |   | Other PostretirementBenefit
Plans
|                                         |  | 2009                   |       |   | 2008                              |   |       | 2009 |  | 2008
|                                         |  | (Thousands of Dollars)
|For the three months ended March 31:     |  |                        |       |   |                                   |   |       |      |  |      |     |  |   |    
|Components of net periodic benefit cost: |  |                        |       |   |                                   |   |       |      |  |      |     |  |   |    
|Service cost                             |  | $                      | 2,039 |   |                                   | $ | 1,627 |      |  | $    | 167 |  | $ | 135
|Interest cost                            |  |                        | 336   |   |                                   |   | 188   |      |  |      | 175 |  |   | 118
|Expected return on assets                |  |                        | (400  | ) |                                   |   | (248  | )    |  |      |    |  |   |   
|Amortization of net loss                 |  |                        | 28    |   |                                   |   | 4     |      |  |      |    |  |   |   
|                                         |  |                        |       |   |                                   |   |       |      |  |      |     |  |   |    
|Net periodic benefit cost                |  | $                      | 2,003 |   |                                   | $ | 1,571 |      |  | $    | 342 |  | $ | 253
|                                         |  |                        |       |   |                                   |   |       |      |  |      |     |  |   |    
|                                        

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



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##### Table of Contents

|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, 2008, 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, 2009, 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
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 10,241,566 common units of NuStar Energy representing an 18.4% 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 or to provide funds for future
distributions. 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.



15



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##### Table of Contents

Results of Operations

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Financial Highlights

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



|                                                                      |  |                                                        |            |   |      |   |            |        |  |   |         |  
|--------------------------------------------------------------------- |  | ------------------------------------------------------ | ---------- | - | ---- | - | ---------- | ------ |  | - | ------- | -
|                                                                      |  | Three Months Ended March 31,                           |            |   |      |  
|                                                                      |  | 2009                                                   |            |   | 2008 |   |            | Change | 
|Equity in earnings of NuStar Energy                                   |  | $                                                      | 12,833     |   |      | $ | 15,754     |        |  | $ | (2,921  | )
|                                                                      |  |                                                        |           
|General and administrative expenses                                   |  |                                                        | (757       | ) |      |   | (742       | )      |  |   | (15     | )
|Other expense, net                                                    |  |                                                        | (24        | ) |      |   |           |        |  |   | (24     | )
|Interest expense, net                                                 |  |                                                        | (27        | ) |      |   | (29        | )      |  |   | 2       |  
|                                                                      |  |                                                        |            |   |      |   |            |        |  |   |         |  
|                                                                      |  |                                                        |           
|Income before income tax (expense) benefit                            |  |                                                        | 12,025     |   |      |   | 14,983     |        |  |   | (2,958  | )
|Income tax (expense) benefit                                          |  |                                                        | (17        | ) |      |   | 20         |        |  |   | (37     | )
|                                                                      |  |                                                        |            |   |      |   |            |        |  |   |         |  
|Net income                                                            |  | $                                                      | 12,008     |   |      | $ | 15,003     |        |  | $ | (2,995  | )
|                                                                      |  |                                                        |            |   |      |   |            |        |  |   |         |  
|                                                                      |  |                                                        |           
|Basic and diluted net income per unit                                 |  | $                                                      | 0.28       |   |      | $ | 0.35       |        |  | $ | (0.07   | )
|                                                                      |  |                                                        |            |   |      |   |            |        |  |   |         |  
|                                                                      |  |                                                        |           
|Weighted average number of basic and diluted units outstanding        |  |                                                        | 42,503,784 |   |      |   | 42,500,990 |        |  |   | 2,794   |  
|                                                                      |  |                                                        |            |   |      |   |            |        |  |   |         |  
|                                                                     
|The following table summarizes NuStar Energys results of operations: | 
|                                                                      |  |                                                       
|                                                                      |  | Three Months Ended March 31,                           |            |   |      |  
|                                                                      |  | 2009                                                   |            |   | 2008 |   |            | Change | 
|                                                                      |  | (Unaudited, Thousands of Dollars, ExceptPer Unit Data) |           
|NuStar Energy Statement of Income Data:                               |  |                                                        |            |   |      |   |            |        |  |   |         |  
|Revenues                                                              |  | $                                                      | 634,004    |   |      | $ | 592,774    |        |  | $ | 41,230  |  
|Cost of product sales                                                 |  |                                                        | 416,795    |   |      |   | 393,009    |        |  |   | 23,786  |  
|Operating expenses                                                    |  |                                                        | 103,322    |   |      |   | 88,450     |        |  |   | 14,872  |  
|Depreciation and amortization                                         |  |                                                        | 34,863     |   |      |   | 29,244     |        |  |   | 5,619   |  
|                                                                      |  |                                                        |            |   |      |   |            |        |  |   |         |  
|Segment operating income                                              |  |                                                        | 79,024     |   |      |   | 82,071     |        |  |   | (3,047  | )
|General and administrative expenses                                   |  |                                                        | 22,464     |   |      |   | 16,083     |        |  |   | 6,381   |  
|Other depreciation and amortization expense                           |  |                                                        | 1,126      |   |      |   | 802        |        |  |   | 324     |  
|                                                                      |  |                                                        |            |   |      |   |            |        |  |   |         |  
|Operating income                                                      |  | $                                                      | 55,434     |   |      | $ | 65,186     |        |  | $ | (9,752  | )
|                                                                      |  |                                                        |            |   |      |   |            |        |  |   |         |  
|                                                                      |  |                                                        |           
|Net income                                                            |  | $                                                      | 39,355     |   |      | $ | 55,869     |        |  | $ | (16,514 | )
|Net income per unit applicable to limited partners                    |  | $                                                      | 0.58       |   |      | $ | 1.01       |        |  | $ | (0.43   | )
|Cash distributions per unit applicable to limited partners            |  | $                                                      | 1.0575     |   |      | $ | 0.9850     |        |  | $ | 0.0725  |  

NuStar Energys net income for the three months ended March 31, 2009 decreased $16.5 million compared to
the three months ended March 31, 2008, primarily due to increases in general and administrative expenses and interest expense and a decrease in segment operating income. NuStar Energys segment operating income decreased $3.0 million for
the three months ended March 31, 2009 compared to the three months ended March 31, 2008, mainly due to a $14.1 million decrease in operating income for the asphalt and fuels marketing segment.

Our equity in earnings of NuStar Energy, our only source of income, directly fluctuates with the amount of NuStar Energys distributions, which determines the
amount of our incentive distribution earnings, and NuStar Energys results of operations, which determine the amounts of earnings attributable to our general partner and limited partner interests.



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



|                                                                                    |  |                              |        |   |      |   |        |        |  |   |        |  
|----------------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | ------ |  | - | ------ | -
|                                                                                    |  | Three Months Ended March 31, |        |   |      |  
|                                                                                    |  | 2009                         |        |   | 2008 |   |        | Change | 
|                                                                                    |  | (Thousands of Dollars)       |        |   |      |  
|NuStar GP Holdings Equity in Earnings of NuStar Energy:                            |  |                              |        |   |      |   |        |        |  |   |        |  
|General partner interest                                                            |  | $                            | 649    |   |      | $ | 1,014  |        |  | $ | (365   | )
|General partner incentive distribution (a)                                          |  |                              | 6,929  |   |      |   | 5,188  |        |  |   | 1,741  |  
|                                                                                    |  |                              |        |   |      |   |        |        |  |   |        |  
|General partners interest in earnings and incentive distributions of NuStar Energy |  |                              | 7,578  |   |      |   | 6,202  |        |  |   | 1,376  |  
|NuStar GP Holdings limited partner interest in earnings of NuStar Energy           |  |                              | 5,976  |   |      |   | 10,273 |        |  |   | (4,297 | )
|Amortization of step-up in basis related to NuStar Energys assets and liabilities  |  |                              | (721   | ) |      |   | (721   | )      |  |   |       |  
|                                                                                    |  |                              |        |   |      |   |        |        |  |   |        |  
|NuStar GP Holdings equity in earnings of NuStar Energy                             |  | $                            | 12,833 |   |      | $ | 15,754 |        |  | $ | (2,921 | )
|                                                                                    |  |                              |        |   |      |   |        |        |  |   |        |  



|(a) | For the first quarter of 2008, NuStar Energys net income allocation to general and limited partners reflected total cash distributions based on the partnership interests
outstanding as of March 31, 2008. NuStar Energy issued approximately 5.1 million common units in April 2008. Actual distribution payments are made within 45 days after the end of each quarter as of a record date that is set after the end
of each quarter. As such, our portion of the actual distributions made with respect to the first quarter 2008, including the IDR, exceeded the net income allocation to us.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our equity in earnings of NuStar Energy related to our general and limited partner interests decreased for the three months ended March 31, 2009 compared to the three months ended March 31, 2008, due to a
decrease in NuStar Energys net income. Equity in earnings related to our limited partner interest was also affected by the issuance of NuStar Energy units in the second quarter of 2008, which diluted its earnings per unit.

NuStar Energys per unit distributions for the three months ended March 31, 2009, increased compared to the three months ended March 31, 2008, to $1.0575
from $0.9850. That increase, coupled with a higher number of NuStar Energy units outstanding following the issuance of units in the second quarter of 2008, resulted in NuStar Energy increasing its total cash distributions. Because 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 that period.

Outlook

NuStar Energy expects its operating results in all of its segments to improve in 2009 compared to 2008.

NuStar Energys Transportation Segment

Barring
any significant unplanned maintenance activity for the remainder of 2009 at the refineries NuStar Energy serves, NuStar Energy expects throughputs for 2009 to decline slightly from 2008 due to the impact of refinery maintenance in the first quarter
and the effect of reduced refinery utilization rates caused by lower demand. However, effective July 1, 2009, NuStar Energy expects to increase the tariff on its pipelines by approximately 7.5%, which should positively affect its revenues and
offset the impact of the decline in throughputs. In addition to the expected tariff increase, the completion of a pipeline expansion project should also offset the expected decline in NuStar Energys throughputs.

NuStar Energys Storage Segment

NuStar Energy expects the same
factors affecting throughputs in its transportation segment and the conversion of certain throughput-based contracts to lease-based contracts, to cause its storage segment throughputs for 2009 to decline from 2008. However, NuStar Energy does not
expect these lower throughputs to significantly impact its revenues or results of operations for the full year of 2009 because most of its revenues relate to long-term storage lease contracts, which are not throughput dependent. Most of NuStar
Energys multi-year storage contracts include annual index increases to storage fee rates, which should increase its storage lease revenue. Additionally, NuStar Energys revenues and results of operations should benefit from key terminal
expansion projects.



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NuStar Energys Asphalt and Fuels Marketing Segment

NuStar Energy expects many of the same factors present in 2008 that contributed positively to its results of operations to continue in 2009, which should increase the
earnings from its asphalt and fuels marketing segment. Specifically, NuStar Energy expects asphalt supply levels to remain below recent averages due to lower U.S. refinery utilization rates, which reduce asphalt production, and the continued lack of
asphalt imports. Demand for asphalt should increase slightly over 2008 levels due to the impact of the American Recovery and Revitalization Act, which provides approximately $29 billion for transportation infrastructure projects. As a result of
those factors, NuStar Energy expects its margin per barrel to improve over 2008 and sales volumes to increase slightly, resulting in improved results of operations for this segment.

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

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 percentage ownership interest of 20.4%. 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 elected to be treated as a taxable entity, we may be required to pay income taxes, depending upon the taxable income
of NuStar GP, LLC. These tax payments 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 on our revolving credit facility, if necessary. Additionally, NuStar Energy reimburses us for the 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 Ended March 31,                |       
|                                                                |  | 2009                                        |        |   | 2008 |  
|                                                                |  | (Thousands of Dollars,Except Per Unit Data) |       
|Cash distributions per unit                                     |  | $                                           | 1.0575 |   |      | $ | 0.985  |  
|Total cash distributions by NuStar Energy to all partners       |  | $                                           | 65,838 |   |      | $ | 60,573 |  
|Cash distributions we received from NuStar Energy:              |  |                                             |        |   |      |   |        |  
|Distributions on our general partner interest                   |  | $                                           | 1,318  |   |      | $ | 1,211  |  
|Distributions on our IDR                                        |  |                                             | 6,929  |   |      |   | 5,718  |  
|Distributions on our limited partnership interests              |  |                                             | 10,830 |   |      |   | 10,067 |  
|                                                                |  |                                             |        |   |      |   |        |  
|Total cash distributions to us                                  |  | $                                           | 19,077 |   |      | $ | 16,996 |  
|                                                                |  |                                             |        |   |      |   |        |  
|Distributions to us as a percentage of total cash distributions |  |                                             | 29.0   | % |      |   | 28.1   | %

Cash Flows for the Three Months Ended March 31, 2009 and 2008

Cash distributions received from NuStar Energy for the three months ended March 31, 2009 were $19.1 million compared to $16.4 million for the three months ended
March 31, 2008. The cash distributions we received were used principally to fund distributions to our unitholders, which totaled $18.3 million for the three months ended March 31, 2009, compared to $15.3 million for the three months
ended March 31, 2008.



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##### Table of Contents

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 to be paid related to the periods shown:



|                            |  |                                             |        |      |   |       
|--------------------------- |  | ------------------------------------------- | ------ | ---- | - | ------
|                            |  | Three Months Ended March 31,               
|                            |  | 2009                                        |        | 2008
|                            |  | (Thousands of Dollars,Except Per Unit Data)
|Cash distributions per unit |  | $                                           | 0.43   |      | $ | 0.36  
|Total cash distributions    |  | $                                           | 18,277 |      | $ | 15,300

Long-Term Contractual Obligations

Credit Facility

Our three-year revolving credit facility matures on July 19, 2009 and has a borrowing capacity
of up to $20 million (Credit Facility). We fund capital contributions to NuStar Energy to maintain our 2% general partner interest as NuStar Energy issues additional units and meet other liquidity and capital resource requirements through borrowings
under the Credit Facility.

Under the terms of the Credit Facility, NuStar Energy must 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. We are also required to receive cash distributions of at least $25.0 million in respect to 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, 2009.

As
of March 31, 2009, we had outstanding borrowings of $6.5 million and availability of $13.5 million under the Credit Facility. Borrowings under the Credit Facility bear interest, at our option, at either an alternative base rate or a LIBOR based
rate, which was 1.1% as of March 31, 2009.

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

Related Party Transactions

Employee Benefit Plans and Unit
Based Compensation

NuStar Energy reimburses us for its share of costs incurred by us related to employee benefit plans and long-term incentive plans.
Expenses resulting from NuStar GP Holdings awards to our non-employee directors are included in General and administrative expenses on our consolidated statements of income. Our liabilities for employee benefits are included in
Employee benefit plan liabilities and our liability related to the long-term incentive plans is included in Accrued compensation expense on our consolidated balance sheets.

The following table summarizes information pertaining to employee benefit plan and long-term incentive plan compensation expenses:



|                                                                            |  |                              |        |      |   |       
|--------------------------------------------------------------------------- |  | ---------------------------- | ------ | ---- | - | ------
|                                                                            |  | Three Months Ended March 31,
|                                                                            |  | 2009                         |        | 2008
|                                                                            |  | (Thousands of Dollars)      
|Expenses for payroll and related benefit plans charged to NuStar Energy     |  | $                            | 42,511 |      | $ | 33,933
|Long-term incentive plan compensation expense charged to NuStar Energy      |  |                              | 3,281  |      |   | 271   
|Expenses resulting from NuStar GP Holdings awards to non-employee directors |  |                              |       |      |   | 192   



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GP Services Agreement

NuStar Energy and NuStar GP, LLC 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 all administrative 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 will reimburse NuStar GP, LLC for all employee costs, other than the
expenses allocated to NuStar GP Holdings (the Holdco Administrative Services Expense).

The Holdco Administrative Services Expense equals $1.1 million and
$0.8 million for the fiscal years 2009 and 2008, respectively, 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 we incurred related to the GP Services Agreement were $0.3 million and $0.1 million for the three months ended
March 31, 2009 and 2008, respectively.

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 outcome 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, 2008.



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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, 2009.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (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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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, 2008.

McKee
System Pipeline Safety Matter. In December 2005, the U.S. Department of Transportation, Office of Pipeline Safety (OPS) proposed penalties totaling $255,000 based on alleged violations of various pipeline safety requirements in the McKee System.
In March 2009, OPS reduced this penalty to $115,000. This penalty was paid in April 2009.

Portland Harbor Superfund Site. NuStar Energys
wholly owned subsidiary, Shore Terminals LLC (Shore) owns a refined product terminal in Portland, Oregon located adjacent to the Portland Harbor. The U.S. Environmental Protection Agency (EPA) has classified portions of the Portland Harbor,
including the portion adjacent to the Shore terminal, as a federal Superfund site due to sediment contamination (the Portland Harbor Site). Portland Harbor is contaminated with metals (such as mercury), pesticides, herbicides,
polynuclear aromatic hydrocarbons, polychlorinated byphenyls, semi-volatile organics and dioxin/furans. Shore and more than 80 other parties have received a General Notice of potential liability from the EPA relating to the Portland
Harbor Site. The letter advised Shore that it may be liable for the costs of investigation and remediation (which liability may be joint and several with other potentially responsible parties), as well as for natural resource damages resulting from
releases of hazardous substances to the Portland Harbor Site. NuStar Energy has agreed to work with more than 65 other potentially responsible parties to attempt to negotiate an agreed method of allocating costs associated with the clean-up. The
precise nature and extent of any clean-up of the Portland Harbor Site, the parties to be involved, the process to be followed for any clean-up and the allocation of any costs for the clean-up among responsible parties have not yet been determined.
It is unclear to what extent, if any, Shore will be liable for environmental costs or damages associated with the Portland Harbor Site. It is also unclear to what extent natural resource damage claims or third party contribution or damage claims
will be asserted against Shore.



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##### Table of Contents

|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 7, 2009                                                 
|                        | 
|By:                     |  | /s/ Steven A. Blank                                         
|                        |  | Steven A. Blank                                             
|                        |  | Senior Vice President, Chief Financial Officer and Treasurer
|                        |  | May 7, 2009                                                 
|                        | 
|By:                     |  | /s/ Thomas R. Shoaf                                         
|                        |  | Thomas R. Shoaf                                             
|                        |  | Vice President and Controller                               
|                        |  | May 7, 2009                                                 



24