10-Q

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 September 30, 2010

OR

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

For the transition period from              to             

Commission File Number 1-32940

NUSTAR GP HOLDINGS, LLC

(Exact name of registrant as specified in its charter)

Delaware	85-0470977
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2330 North Loop 1604 West San Antonio, Texas	78248
(Address of principal executive offices)	(Zip Code)

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

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

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

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

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

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

The number of units outstanding as of October 31, 2010 was 42,547,294.

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 September 30, 2010 and December 31, 2009	3
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2010 and 2009	4
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009	5
	Condensed Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 4.	Controls and Procedures	24
PART II - OTHER INFORMATION
Item 6.	Exhibits	25
SIGNATURES		26

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

NUSTAR GP HOLDINGS, LLC

CONSOLIDATED BALANCE SHEETS

(Thousands of Dollars)

	September 30, 2010			December 31, 2009
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	7,068		$	371
Receivable from NuStar Energy L.P.		23,309			10,639
Income tax receivable		805			5,798
Other receivables		938			795
Prepaid expenses		176			353
Deferred income tax assets, net		1,890			1,198
Total current assets		34,186			19,154
Investment in NuStar Energy L.P.		566,412			559,519
Long-term receivable from NuStar Energy L.P.		9,651			7,663
Deferred income tax assets, net		8,030			6,923
Total assets	$	618,279		$	593,259
Liabilities and Members’ Equity
Current liabilities:
Short-term debt	$	19,500		$	14,300
Accounts payable		591			351
Accrued compensation expense		24,114			14,593
Accrued liabilities		545			829
Taxes other than income tax		847			848
Total current liabilities		45,597			30,921
Employee benefit plan liabilities		34,099			24,130
Commitments and contingencies (Note 9)
Members’ equity		545,535			545,200
Accumulated other comprehensive loss:
Share of NuStar Energy L.P.’s other comprehensive income		1,040			1,455
Pension adjustments, net of tax		(7,992	)		(8,447	)
Total accumulated other comprehensive loss		(6,952	)		(6,992	)
Total members’ equity		538,583			538,208
Total liabilities and members’ equity	$	618,279		$	593,259

See Condensed Notes to Consolidated Financial Statements.

3

NUSTAR GP HOLDINGS, LLC

CONSOLIDATED STATEMENTS OF INCOME

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Equity in earnings of NuStar Energy L.P.	$	18,332		$	18,051		$	51,443		$	52,780
General and administrative expenses		(671	)		(679	)		(2,121	)		(2,156	)
Other income, net		15			22			8,035			19
Interest expense, net		(245	)		(88	)		(902	)		(137	)
Income before income tax benefit		17,431			17,306			56,455			50,506
Income tax benefit		346			420			701			603
Net income	$	17,777		$	17,726		$	57,156		$	51,109
Basic and diluted net income per unit	$	0.42		$	0.42		$	1.35		$	1.20
Weighted average number of basic and diluted units outstanding		42,514,494			42,504,238			42,514,494			42,503,937

See Condensed Notes to Consolidated Financial Statements.

4

NUSTAR GP HOLDINGS, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, Thousands of Dollars)

	Nine Months Ended September 30,
	2010			2009
Cash Flows from Operating Activities:
Net income	$	57,156		$	51,109
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of NuStar Energy L.P.		(51,443	)		(52,780	)
Distributions of equity in earnings from NuStar Energy L.P.		51,443			52,780
Gain related to issuance of NuStar Energy L.P. limited partner units		(7,767	)		0
Benefit for deferred income tax		(1,799	)		(1,833	)
Increase in employee benefit plan liabilities		9,969			7,048
Changes in current assets and liabilities (Note 7)		2,649			(152	)
Other, net		(2,256	)		(476	)
Net cash provided by operating activities		57,952			55,696
Cash Flows from Investing Activities:
Distributions in excess of equity in earnings from NuStar Energy L.P.		9,739			4,442
Investment in NuStar Energy L.P.		(12,530	)		0
Proceeds from sale of NuStar Energy L.P. units in connection with employee benefit plans		3,518			676
Net cash provided by investing activities		727			5,118
Cash Flows from Financing Activities:
Proceeds from short-term debt borrowings		5,200			0
Repayment of long-term debt		0			(6,500	)
Distributions to unitholders		(57,182	)		(54,831	)
Net cash used in financing activities		(51,982	)		(61,331	)
Net increase (decrease) in cash and cash equivalents		6,697			(517	)
Cash and cash equivalents at the beginning of the period		371			1,791
Cash and cash equivalents at the end of the period	$	7,068		$	1,274

See Condensed Notes to Consolidated Financial Statements.

5

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 September 30, 2010, we owned approximately 17.7% of NuStar Energy, consisting of the following:

• the 2% general partner interest;

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

• 10,326,792 common units of NuStar Energy representing a 15.7% limited partner interest.

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

Basis of Presentation

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

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

These unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless otherwise indicated. Financial information for the three and nine months ended September 30, 2010 and 2009 included in these Condensed Notes to Consolidated Financial Statements is derived from our unaudited consolidated financial statements. Operating results for the three and nine months ended September 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. The consolidated balance sheet as of December 31, 2009 has been derived from the audited consolidated financial statements as of that date. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2009.

6

NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2. NEW ACCOUNTING PRONOUNCEMENTS

Fair Value Measurements

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

3. INVESTMENT IN NUSTAR ENERGY

On May 19, 2010, NuStar Energy issued 4,400,000 common units representing limited partner interests at a price of $56.55 per unit. NuStar Energy received proceeds of $240.1 million, net of issuance cost. In conjunction with NuStar Energy’s issuance of common units, we contributed $5.1 million to NuStar Energy in order to maintain our 2% general partner interest and our ownership in NuStar Energy was reduced from 18.7% at December 31, 2009 to 17.7% at September 30, 2010. This issuance resulted in a gain of $7.8 million for the nine months ended September 30, 2010, which is included in “Other income, net” on our consolidated statements of income, and represents the increase in the value of our proportionate share of NuStar Energy’s capital.

7

NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Summary Financial Information

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

	September 30, 2010		December 31, 2009
	(Unaudited)
Balance Sheet Information:
Current assets	$	931,973	$	734,719
Property, plant and equipment, net		3,144,762		3,028,196
Goodwill		812,172		807,742
Other long-term assets, net		302,541		204,016
Total assets	$	5,191,448	$	4,774,673
Current liabilities	$	384,444	$	338,754
Long-term debt, less current portion		1,989,737		1,828,993
Other long-term liabilities		127,032		121,958
Total liabilities		2,501,213		2,289,705
Partners’ equity		2,690,235		2,484,968
Total liabilities and partners’ equity	$	5,191,448	$	4,774,673

	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
	(Thousands of Dollars)
Statement of Income Information:
Revenues	$	1,138,379	$	1,251,247	$	3,208,849	$	2,873,093
Operating income		90,290		87,190		232,093		226,700
Net income		68,310		64,440		187,435		187,530

Other

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

	September 30, 2010			December 31, 2009
	(Thousands of Dollars)
NuStar Energy’s total partners’ equity	$	2,690,235		$	2,484,968
NuStar GP Holdings’ ownership interest in NuStar Energy		17.7	%		18.7	%
NuStar GP Holdings’ share of NuStar Energy’s partners’ equity		476,172			464,689
Step-up in basis related to NuStar Energy’s assets and liabilities,           including equity method goodwill, and other		90,240			94,830
Investment in NuStar Energy	$	566,412		$	559,519

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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

4. RELATED PARTY TRANSACTIONS

We had a receivable from NuStar Energy of $23.3 million and $10.6 million, as of September 30, 2010 and December 31, 2009, respectively, relating to payroll, employee-related benefit plans and unit-based compensation. We also had a long-term receivable of $9.7 million and $7.7 million from NuStar Energy as of September 30, 2010 and December 31, 2009, respectively, related to amounts payable for retiree medical benefits and other post-employment benefits. The following table represents total related party transactions charged to NuStar Energy:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
	(Thousands of Dollars)
Expenses for payroll, employee-related benefit plans and unit-based compensation	$	52,626	$	40,416	$	150,950	$	133,057
Other		151		154		304		302
Total related party transactions charged to NuStar Energy	$	52,777	$	40,570	$	151,254	$	133,359

GP Services Agreement

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

Beginning with the 2009 fiscal year and for each fiscal year thereafter, the Holdco Administrative Services Expense totals $1.1 million plus 1.0% of NuStar GP, LLC’s domestic bonus and unit-based compensation expense, subject to certain other adjustments. The GP Services Agreement will terminate on December 31, 2012, with automatic two-year renewals unless terminated by either party upon six months’ prior written notice. The aggregate amounts of Holdco Administrative Services Expense that we incurred were $0.3 million for the three months ended September 30, 2010 and 2009, and $1.0 million for the nine months ended September 30, 2010 and 2009.

9

NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

5. DISTRIBUTIONS FROM NUSTAR ENERGY

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
	(Thousands of Dollars, Except Per Unit Data)
General partner interest	$	1,592	$	1,327	$	4,635	$	3,963
General partner incentive distribution		8,568		7,055		24,736		20,913
Total general partner distribution		10,160		8,382		29,371		24,876
Limited partner distribution		11,114		10,895		32,886		32,552
Total distributions to NuStar GP Holdings		21,274		19,277		62,257		57,428
Public unitholders’ distributions		58,342		47,105		169,505		140,630
Total cash distributions	$	79,616	$	66,382	$	231,762	$	198,058
Cash distributions per unit applicable to limited partners	$	1.075	$	1.065	$	3.205	$	3.180

In August 2010, NuStar Energy paid a quarterly cash distribution totaling $78.8 million, or $1.065 per unit, related to the second quarter of 2010. On October 25, 2010, NuStar Energy announced a quarterly cash distribution of $1.075 per unit related to the third quarter of 2010. This distribution will be paid on November 5, 2010 to unitholders of record on November 1, 2010 and will total $79.6 million.

6. FAIR VALUE MEASUREMENTS

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

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

	September 30, 2010
	Level 1		Level 2		Level 3		Total
	(Thousands of Dollars)
Accrued compensation expense:
NuStar Energy restricted units	$	15,387	$	0	$	0	$	15,387
NuStar Energy unit options		0		5,508		0		5,508
Total	$	15,387	$	5,508	$	0	$	20,895
	December 31, 2009
	Level 1		Level 2		Level 3		Total
	(Thousands of Dollars)
Accrued compensation expense:
NuStar Energy restricted units	$	8,689	$	0	$	0	$	8,689
NuStar Energy unit options		0		5,418		0		5,418
Total	$	8,689	$	5,418	$	0	$	14,107

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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

	September 30, 2010
Expected life in years	6.2
Expected volatility	36.1%
Expected distribution yield	6.9%
Risk-free interest rate	0.4%

7. STATEMENTS OF CASH FLOWS

Changes in current assets and liabilities were as follows:

	Nine Months Ended September 30,
	2010			2009
	(Thousands of Dollars)
Decrease (increase) in current assets:
Receivable from NuStar Energy	$	(11,854	)	$	(5,033	)
Income tax receivable		4,993			(2,295	)
Other receivables		(143	)		82
Prepaid expenses		177			12
Increase (decrease) in current liabilities:
Accounts payable		240			(314	)
Accrued compensation expense		9,521			7,867
Accrued liabilities		(284	)		(49	)
Taxes other than income tax		(1	)		(422	)
Changes in current assets and liabilities	$	2,649		$	(152	)

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

	Nine Months Ended September 30,
	2010			2009
	(Thousands of Dollars)
Cash paid for interest	$	687		$	85
Cash (refunded) paid for income tax	$	(3,895	)	$	3,523

8. CREDIT FACILITY

On July 15, 2010, we entered into a 364-day revolving credit facility (2010 Credit Facility) that matures on July 14, 2011 with a borrowing capacity of up to $30.0 million, of which, up to $10.0 million may be available for letters of credit. Interest on the 2010 Credit Facility is based upon, at our option, either an alternative base rate plus 1.75% or a LIBOR-based rate plus 2.75%, which was 3.1% as of September 30, 2010. These interest rates are 1.75% lower than the rates that were in effect under our previous revolving credit facility, which matured on July 16, 2010 (2009 Credit Facility).

During the second quarter of 2010, we borrowed $5.2 million under the 2009 Credit Facility mainly to fund our $5.1 million contribution to NuStar Energy to maintain our 2% general partner interest following its issuance of common units in May 2010. On July 15, 2010, we borrowed $19.5 million under the 2010 Credit Facility to repay in full the balance on the 2009 Credit Facility. As of September 30, 2010, we had availability of $10.5 million for borrowings under the 2010 Credit Facility. The carrying amount of the 2010 Credit Facility approximated its fair value as of September 30, 2010.

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NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The terms of the 2010 Credit Facility, which are similar to those under the 2009 Credit Facility, require NuStar Energy to maintain a total debt-to-EBITDA ratio of less than 5.0-to-1.0 for any four consecutive quarters, subject to adjustment following certain acquisitions. We are also required to receive cash distributions of at least $35.0 million in respect of our ownership interests in NuStar Energy for the preceding four fiscal quarters ending on the last day of each fiscal quarter. Our management believes that we are in compliance with the covenants, including the debt-to-EBITDA ratio, which was 4.6x as of September 30, 2010.

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. NuStar Energy acquired Kaneb on July 1, 2005. The complaint sought recovery of the cost of remediation of fuel leaks in the 1970s from a pipeline that had once connected a former Grace Energy terminal with Otis Air Force Base in Massachusetts (Otis AFB). Grace Energy alleges the Otis AFB pipeline and related environmental liabilities had been transferred in 1978 to an entity that was part of Kaneb’s acquisition of Support Terminal Services, Inc. and its subsidiaries from Grace Energy in 1993. Kaneb contends that it did not acquire the Otis AFB pipeline and never assumed any responsibility for any associated environmental damage.

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

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

Eres Matter. In August 2008, Eres N.V. (Eres) forwarded a demand for arbitration to CITGO Asphalt Refining Company (CARCO), CITGO Petroleum Corporation (CITGO), NuStar Asphalt Refining, LLC (NuStar Asphalt) and NuStar Marketing LLC (NuStar Marketing, and together with CARCO, CITGO and NuStar Asphalt, the Defendants) contending that the Defendants are in breach of a tanker voyage charter party agreement, dated November 2004, between Eres and CARCO (the Charter Agreement). The Charter Agreement provides for CARCO’s use of Eres’ vessels for the shipment of asphalt. Eres contends that NuStar Asphalt and/or NuStar Marketing (together, the NuStar Entities) assumed the Charter Agreement when NuStar Asphalt purchased the CARCO assets, and that the Defendants have failed to perform under the Charter Agreement since January 1, 2008. Eres has valued its damages for the alleged breach of contract claim at approximately $78.1 million. Pursuant to a May 2010 ruling by the U.S. District Court for the Southern District of Texas, the NuStar Entities were found to have assumed the Charter Agreement from CARCO

12

NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

and to be obligated to defend and indemnify CITGO and CARCO against Eres’ claims. The Defendants were ordered to proceed with arbitration. NuStar Energy intends to vigorously defend against Eres’ claims in arbitration.

Other

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

10. MEMBERS’ EQUITY AND NET INCOME PER UNIT

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

Balance as of December 31, 2009	$	538,208
Net income		57,156
Distributions to unitholders		(57,182	)
Share of NuStar Energy’s other comprehensive loss		(415	)
Unit-based compensation		361
Other		455
Balance as of September 30, 2010	$	538,583

Comprehensive Income

Our total comprehensive income was as follows:

	Three Months  Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010			2009
	(Thousands of Dollars)
Net income	$	17,777	$	17,726	$	57,156		$	51,109
Share of NuStar Energy’s other comprehensive income (loss)		1,036		1,870		(415	)		4,124
Other		149		28		455			84
Comprehensive income	$	18,962	$	19,624	$	57,196		$	55,317

Net Income Per Unit

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

The computation of diluted net income per unit for the three and nine months ended September 30, 2010 and 2009 excludes 324,100 outstanding options to purchase NuStar GP Holdings units, as the exercise price exceeded the average market price and their effect would be anti-dilutive.

Cash Distributions

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

	Three Months  Ended September 30,				Nine Months  Ended September 30,
	2010		2009		2010		2009
	(Thousands of Dollars, Except Per Unit Data)
Cash distributions per unit	$	0.480	$	0.435	$	1.390	$	1.295
Total cash distributions	$	20,407	$	18,489	$	59,095	$	55,043

13

NUSTAR GP HOLDINGS, LLC

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In August 2010, we paid a quarterly cash distribution totaling $19.6 million, or $0.46 per unit, related to the second quarter of 2010. On October 25, 2010, we announced a quarterly cash distribution of $0.48 per unit related to the third quarter of 2010. This distribution will be paid on November 10, 2010 to unitholders of record on November 1, 2010 and will total $20.4 million.

11. EMPLOYEE BENEFIT PLANS

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

	Pension Plans (a)						Other Postretirement Benefit Plans
	2010			2009			2010		2009
	(Thousands of Dollars)
For the three months ended September 30:
Components of net periodic benefit cost:
Service cost	$	2,846		$	2,039		$	226	$	167
Interest cost		559			336			208		175
Expected return on assets		(577	)		(400	)		0		0
Amortization of net loss		128			28			21		0
Net periodic benefit cost	$	2,956		$	2,003		$	455	$	342
For the nine months ended September 30:
Components of net periodic benefit cost:
Service cost	$	8,538		$	6,117		$	678	$	501
Interest cost		1,675			1,008			624		525
Expected return on assets		(1,735	)		(1,200	)		0		0
Amortization of net loss		392			84			63		0
Net periodic benefit cost	$	8,870		$	6,009		$	1,365	$	1,026

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

14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains certain estimates, predictions, projections, assumptions and other forward-looking statements that involve various risks and uncertainties. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report. These forward-looking statements can generally be identified by the words “anticipates,” “believes,” “expects,” “plans,” “intends,” “estimates,” “forecasts,” “budgets,” “projects,” “will,” “could,” “should,” “may” and similar expressions. These statements reflect our current views with regard to future events and are subject to various risks, uncertainties and assumptions. Please read our annual report on Form 10-K for the year ended December 31, 2009, Part I “Risk Factors,” as well as our subsequent quarterly reports on Form 10-Q, 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 September 30, 2010, our aggregate ownership interests in NuStar Energy consisted of the following:

• the 2% general partner interest;

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

• 10,326,792 common units of NuStar Energy representing a 15.7% limited partner interest.

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

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

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

15

RESULTS OF OPERATIONS

Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009

Financial Highlights

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

	Three Months Ended September 30,
	2010			2009			Change
Equity in earnings of NuStar Energy	$	18,332		$	18,051		$	281
General and administrative expenses		(671	)		(679	)		8
Other income, net		15			22			(7	)
Interest expense, net		(245	)		(88	)		(157	)
Income before income tax benefit		17,431			17,306			125
Income tax benefit		346			420			(74	)
Net income	$	17,777		$	17,726		$	51
Basic and diluted net income per unit	$	0.42		$	0.42		$	0
Weighted average number of basic and diluted units outstanding		42,514,494			42,504,238			10,256

The following table summarizes NuStar Energy’s results of operations:

	Three Months Ended September 30,
	2010		2009		Change
	(Unaudited, Thousands of Dollars, Except Per Unit Data)
NuStar Energy Statement of Income Data:
Revenues	$	1,138,379	$	1,251,247	$	(112,868	)
Cost of product sales		860,942		989,868		(128,926	)
Operating expenses		121,748		118,190		3,558
Depreciation and amortization expense		37,084		35,580		1,504
Segment operating income		118,605		107,609		10,996
General and administrative expenses		26,860		19,213		7,647
Other depreciation and amortization expense		1,455		1,206		249
Operating income	$	90,290	$	87,190	$	3,100
Net income	$	68,310	$	64,440	$	3,870
Net income per unit applicable to limited partners	$	0.90	$	1.03	$	(0.13	)
Cash distributions per unit applicable to limited partners	$	1.075	$	1.065	$	0.010

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NuStar Energy’s net income increased $3.9 million for the three months ended September 30, 2010, compared to the three months ended September 30, 2009, primarily due to an increase in segment operating income, partially offset by an increase in general and administrative expenses. NuStar Energy’s segment operating income increased $11.0 million for the three months ended September 30, 2010, compared to the three months ended September 30, 2009, due to increased operating income from all of its reportable business segments.

Equity in earnings of NuStar Energy

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

	Three Months Ended September 30,
	2010			2009			Change
	(Thousands of Dollars)
NuStar GP Holdings’ Equity in Earnings of NuStar Energy:
General partner interest	$	1,195		$	1,148		$	47
General partner incentive distribution		8,568			7,055			1,513
General partner’s interest in earnings and incentive distributions of NuStar Energy		9,763			8,203			1,560
Limited partner interest in earnings of NuStar Energy		9,290			10,569			(1,279	)
Amortization of step-up in basis related to NuStar Energy’s assets and liabilities		(721	)		(721	)		0
Equity in earnings of NuStar Energy	$	18,332		$	18,051		$	281

NuStar Energy’s per unit distributions for the three months ended September 30, 2010 increased, compared to the three months ended September 30, 2009, from $1.065 to $1.075. That increase, coupled with an increase in the number of NuStar Energy units outstanding resulting from the issuance of units in the fourth quarter of 2009 and the second quarter of 2010, resulted in NuStar Energy increasing its total cash distributions. Since our IDR in NuStar Energy entitle us to an increasing amount of NuStar Energy’s cash distributions, our equity in earnings of NuStar Energy related to our IDR also increased for that period.

Our equity in earnings related to our limited partner interest in NuStar Energy decreased for the three months ended September 30, 2010, compared to the three months ended September 30, 2009, due to a decrease in NuStar Energy’s net income per unit.

17

Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009

Financial Highlights

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

	Nine Months Ended September 30,
	2010			2009			Change
Equity in earnings of NuStar Energy	$	51,443		$	52,780		$	(1,337	)
General and administrative expenses		(2,121	)		(2,156	)		35
Other income, net		8,035			19			8,016
Interest expense, net		(902	)		(137	)		(765	)
Income before income tax benefit		56,455			50,506			5,949
Income tax benefit		701			603			98
Net income	$	57,156		$	51,109		$	6,047
Basic and diluted net income per unit	$	1.35		$	1.20		$	0.15
Weighted average number of basic and diluted units outstanding		42,514,494			42,503,937			10,557

The following table summarizes NuStar Energy’s results of operations:

	Nine Months Ended September 30,
	2010		2009		Change
	(Unaudited, Thousands of Dollars, Except Per Unit Data)
NuStar Energy Statement of Income Data:
Revenues	$	3,208,849	$	2,873,093	$	335,756
Cost of product sales		2,422,751		2,138,524		284,227
Operating expenses		363,028		332,017		31,011
Depreciation and amortization expense		110,287		104,909		5,378
Segment operating income		312,783		297,643		15,140
General and administrative expenses		76,324		67,529		8,795
Other depreciation and amortization expense		4,366		3,414		952
Operating income	$	232,093	$	226,700	$	5,393
Net income	$	187,435	$	187,530	$	(95	)
Net income per unit applicable to limited partners	$	2.55	$	2.99	$	(0.44	)
Cash distributions per unit applicable to limited partners	$	3.205	$	3.180	$	0.025

Despite the increase in NuStar Energy’s operating income and the decrease in income tax expense, its net income for the nine months ended September 30, 2010 was comparable to the nine months ended September 30, 2009, primarily due to a decrease in other income.

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NuStar Energy’s segment operating income increased $15.1 million for the nine months ended September 30, 2010, compared to the nine months ended September 30, 2009, mainly due to increased operating income from its asphalt and fuels marketing segment and its transportation segment.

Equity in earnings of NuStar Energy

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

	Nine Months  Ended September 30,
	2010			2009			Change
	(Thousands of Dollars)
NuStar GP Holdings’ Equity in Earnings of NuStar Energy:
General partner interest	$	3,254		$	3,333		$	(79	)
General partner incentive distribution		24,736			20,913			3,823
General partner’s interest in earnings and incentive distributions of NuStar Energy		27,990			24,246			3,744
Limited partner interest in earnings of NuStar Energy		25,616			30,697			(5,081	)
Amortization of step-up in basis related to NuStar Energy’s assets and liabilities		(2,163	)		(2,163	)		0
Equity in earnings of NuStar Energy	$	51,443		$	52,780		$	(1,337	)

NuStar Energy’s per unit distributions for the nine months ended September 30, 2010 increased, compared to the nine months ended September 30, 2009, from $3.180 to $3.205. That increase, coupled with an increase in the number of NuStar Energy units outstanding resulting from the issuance of units in the fourth quarter of 2009 and the second quarter of 2010, resulted in NuStar Energy increasing its total cash distributions. Since our IDR in NuStar Energy entitle us to an increasing amount of NuStar Energy’s cash distributions, our equity in earnings of NuStar Energy related to our IDR increased for that period.

Our equity in earnings related to our limited partner interest in NuStar Energy decreased for the nine months ended September 30, 2010, compared to the nine months ended September 30, 2009, due to a decrease in NuStar Energy’s net income per unit.

Other income, net

Other income, net increased for the nine months ended September 30, 2010, compared to the nine months ended September 30, 2009 due to NuStar Energy’s issuance of 4,400,000 common units in May 2010. This issuance resulted in a gain of $7.8 million representing the increase in the value of our proportionate share of NuStar Energy’s capital.

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OUTLOOK

Overall, NuStar Energy expects its net income in the fourth quarter to be lower than the third quarter mainly due to lower earnings from its asphalt operations. Asphalt sales typically decline in the fourth quarter for seasonal reasons, including decreased road construction during colder months. However, NuStar Energy expects earnings from its fuels marketing operations, transportation segment and storage segment to improve compared to the third quarter, but not enough to offset the lower earnings from its asphalt operations.

For the full year 2010, NuStar Energy’s net income should be higher than 2009 due to increases in the earnings from all three of its reportable segments. However, NuStar Energy’s earnings per unit likely will decline due to the dilutive effect of its equity issuances in 2009 and 2010.

NuStar Energy’s Storage Segment

NuStar Energy expects the remainder of 2010 to continue to benefit from higher renewal rates and incremental earnings from the acquisition of three terminals in May 2010. Also, this segment should realize higher earnings from capital projects that NuStar Energy completed during 2009 as well as certain capital projects expected to be completed late in 2010. As a result, NuStar Energy expects the storage segment results for the full year 2010 to exceed 2009.

NuStar Energy’s Transportation Segment

Excluding the effect of pipeline sales that occurred in 2009, NuStar Energy expects throughputs for the full year 2010 to increase slightly over 2009 primarily due to higher demand in its mid-continent region and higher utilization rates at certain of its customers’ refineries. Therefore, NuStar Energy expects the full year 2010 earnings for this segment to improve compared to 2009 despite the fact that the tariffs on its pipelines regulated by the Federal Energy Regulatory Commission, which adjust annually based upon changes in the producer price index, were reduced by 1.3 percent effective July 1, 2010.

NuStar Energy’s Asphalt and Fuels Marketing Segment

NuStar Energy expects the asphalt and fuels marketing segment results to increase for the full year 2010 compared to 2009 due mainly to higher earnings from the fuels marketing operations. NuStar Energy’s fuels marketing operations should benefit from improved results from sales of bunker fuel and fuel oil as well as refined product and crude trading. However, NuStar Energy expects the full year results from its asphalt operations to be comparable to 2009.

NuStar Energy’s outlook could change depending on, among other things, the pace of the economic recovery, and other factors that affect overall demand for the products it stores, transports and sells as well as changes in commodity prices for the products it markets.

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

20

LIQUIDITY AND CAPITAL RESOURCES

General

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

Cash Distributions from NuStar Energy

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
	(Thousands of Dollars, Except Per Unit Data)
Cash distributions per unit	$	1.075		$	1.065		$	3.205		$	3.180
Total cash distributions by NuStar Energy to all partners	$	79,616		$	66,382		$	231,762		$	198,058
Cash distributions we received from NuStar Energy:
General partner interest	$	1,592		$	1,327		$	4,635		$	3,963
General partner incentive distribution		8,568			7,055			24,736			20,913
Limited partner interest – common units		11,114			10,895			32,886			32,552
Total cash distributions to us	$	21,274		$	19,277		$	62,257		$	57,428
Distributions to us as a percentage of total cash distributions		26.7	%		29.0	%		26.9	%		29.0	%

Cash Flows for the Nine Months Ended September 30, 2010 and 2009

Cash distributions received from NuStar Energy were $61.2 million for the nine months ended September 30, 2010, which we used principally to fund distributions to our unitholders totaling $57.2 million. We borrowed $5.2 million for the nine months ended September 30, 2010 to fund our $5.1 million contribution to NuStar Energy in order to maintain our 2% general partner interest following its issuance of common units in May 2010. This issuance resulted in a gain of $7.8 million, which is included on the statement of cash flows as an adjustment to reconcile net income to net cash provided by operating activities. Additionally, for the nine months ended September 30, 2010, we purchased $7.4 million of NuStar Energy units to satisfy awards granted in connection with unit-based compensation.

Cash distributions received from NuStar Energy were $57.2 million for the nine months ended September 30, 2009, which we used principally to fund distributions to our unitholders totaling $54.8 million. We repaid $6.5 million of long-term debt during the nine months ended September 30, 2009 from available cash on hand, due to the impending maturity of our three-year revolving credit facility.

21

Credit Facility

On July 15, 2010, we entered into a 364-day revolving credit facility (2010 Credit Facility) that matures on July 14, 2011 with a borrowing capacity of up to $30.0 million, of which, up to $10.0 million may be available for letters of credit. Interest on the 2010 Credit Facility is based upon, at our option, either an alternative base rate plus 1.75% or a LIBOR-based rate plus 2.75%, which was 3.1% as of September 30, 2010. These interest rates are 1.75% lower than the rates that were in effect under our previous revolving credit facility, which matured on July 16, 2010 (2009 Credit Facility).

During the second quarter of 2010, we borrowed $5.2 million under the 2009 Credit Facility mainly to fund our $5.1 million contribution to NuStar Energy to maintain our 2% general partner interest following its issuance of common units in May 2010. On July 15, 2010, we borrowed $19.5 million under the 2010 Credit Facility to repay in full the balance on the 2009 Credit Facility. As of September 30, 2010, we had availability of $10.5 million for borrowings under the 2010 Credit Facility. The carrying amount of the 2010 Credit Facility approximated its fair value as of September 30, 2010.

The terms of the 2010 Credit Facility, which are similar to those under the 2009 Credit Facility, require NuStar Energy to maintain a total debt-to-EBITDA ratio of less than 5.0-to-1.0 for any four consecutive quarters, subject to adjustment following certain acquisitions. We are also required to receive cash distributions of at least $35.0 million in respect of our ownership interests in NuStar Energy for the preceding four fiscal quarters ending on the last day of each fiscal quarter. Our management believes that we are in compliance with the covenants, including the debt-to-EBITDA ratio, which was 4.6x as of September 30, 2010.

Investment in NuStar Energy

In May 2010, NuStar Energy issued 4,400,000 common units representing limited partner interests at a price of $56.55 resulting in net proceeds of $240.1 million. In connection with this issuance, we contributed $5.1 million to NuStar Energy to maintain our 2% general partner interest.

Cash Distributions to Unitholders

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
	(Thousands of Dollars, Except Per Unit Data)
Cash distributions per unit	$	0.480	$	0.435	$	1.390	$	1.295
Total cash distributions	$	20,407	$	18,489	$	59,095	$	55,043

Related Party Transactions

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

Contingencies

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

22

CRITICAL ACCOUNTING POLICIES

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

23

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 September 30, 2010.

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

24

PART II - OTHER INFORMATION

Item 6. Exhibits

Exhibit Number	Description
*31.01	Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer
*31.02	Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer
*32.01	Section 1350 Certification (under Section 906 of the Sarbanes-Oxley Act of 2002) of principal executive officer
*32.02	Section 1350 Certification (under Section 906 of the Sarbanes-Oxley Act of 2002) of principal financial officer
**101	The following interactive data files pursuant to Rule 405 of Regulation S-T from NuStar GP Holdings, LLC’s Form 10-Q for the quarter ended September 30, 2010, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Cash Flows, and (iv) Condensed Notes to Consolidated Financial Statements, tagged as blocks of text

* Filed herewith.

** Submitted electronically herewith.

In accordance with Rule 406T of Regulation S-T, the XBRL information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act. The financial information contained in the XBRL-related documents is “unaudited” or “unreviewed.”

25

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
	November 4, 2010
By:	/s/ Steven A. Blank
	Steven A. Blank
	Senior Vice President, Chief Financial Officer and Treasurer
	November 4, 2010
By:	/s/ Thomas R. Shoaf
	Thomas R. Shoaf
	Vice President and Controller
	November 4, 2010

26

EX-31.01

Exhibit 31.01

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Curtis V. Anastasio, certify that:

1. I have reviewed this quarterly report on Form 10-Q of NuStar GP Holdings, LLC (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2010

/s/ Curtis V. Anastasio

Curtis V. Anastasio

President and Chief Executive Officer

EX-31.02

Exhibit 31.02

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Steven A. Blank, certify that:

1. I have reviewed this quarterly report on Form 10-Q of NuStar GP Holdings, LLC (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2010

/s/ Steven A. Blank

Steven A. Blank

Senior Vice President, Chief Financial Officer and Treasurer

EX-32.01

Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of NuStar GP Holdings, LLC (the Company) on Form 10-Q for the quarter ended September 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Curtis V. Anastasio, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Curtis V. Anastasio

Curtis V. Anastasio

President and Chief Executive Officer

November 4, 2010

A signed original of the written statement required by Section 906 has been provided to NuStar GP Holdings, LLC and will be retained by NuStar GP Holdings, LLC and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.02

Exhibit 32.02

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of NuStar GP Holdings, LLC (the Company) on Form 10-Q for the quarter ended September 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Steven A. Blank, Senior Vice President, Chief Financial Officer and Treasurer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Steven A. Blank

Steven A. Blank

Senior Vice President, Chief Financial Officer and Treasurer

November 4, 2010

A signed original of the written statement required by Section 906 has been provided to NuStar GP Holdings, LLC and will be retained by NuStar GP Holdings, LLC and furnished to the Securities and Exchange Commission or its staff upon request.