1359055--3/14/2008--Buckeye_GP_Holdings

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Risks Inherent in our Dependence on Distributions from Buckeye Our primary cash-generating assets are our general partner interests in Buckeye, which consist primarily of general partner units and the incentive distribution rights in Buckeye. Our cash flow is, therefore, directly dependent upon the ability of Buckeye to make cash distributions to its partners. A reduction in Buckeye's distributions will disproportionately affect the amount of cash distributions to which we are currently entitled. Our right to receive incentive distributions will terminate if Buckeye's general partner is removed. Buckeye may issue additional LP Units or other equity securities, which may increase the risk that Buckeye will not have sufficient available cash to maintain or increase its cash distribution level per LP Unit. In the future, we may not have sufficient cash to maintain the level of our quarterly distributions. Buckeye's practice of distributing all of its available cash may limit its ability to grow, which could impact distributions to us and the available cash that we have to distribute to our Unitholders. Restrictions in Buckeye's credit facility could limit its ability to make distributions to us. Risks Inherent in Buckeye's Business Changes in refined petroleum products demand and distribution may adversely affect Buckeye's business. Certain of Buckeye's pipeline operations charge tariff rates which are subject to regulation and change by FERC. Buckeye's partnership status may be a disadvantage to it in calculating cost of service for rate-making purposes. Environmental regulation may impose significant costs and liabilities on Buckeye. Existing or future state or federal government regulations relating to certain chemicals or additives in gasoline or diesel fuel could require capital expenditures or result in lower pipeline volumes and thereby adversely affect Buckeye's results of operations and cash flows, thereby reducing Buckeye's ability to make distributions to Unitholders, including us. Department of Transportation regulations may impose significant costs and liabilities on Buckeye. Terrorist attacks could adversely affect Buckeye's business. Buckeye's operations are subject to operational hazards and unforeseen interruptions for which Buckeye may not be insured. Competition could adversely affect Buckeye's operating results. Mergers among Buckeye's customers and competitors could result in lower volumes being shipped on Buckeye's pipelines and stored in Buckeye's terminals, thereby reducing the amount of cash Buckeye generates. Buckeye may incur liabilities related to assets Buckeye has acquired. These costs and liabilities may not be covered by indemnification rights that Buckeye may have against the sellers of the assets. A decline in production at the ConocoPhillips Wood River refinery could materially reduce the volume of refined petroleum products Buckeye transports. Potential future acquisitions and expansions, if any, may affect Buckeye's business by substantially increasing the level of Buckeye's indebtedness and contingent liabilities and may increase Buckeye's risks of being unable to effectively integrate these new operations. Buckeye may not realize the expected benefits from the acquisitions of Lodi Gas and Farm Home. Buckeye's natural gas storage business depends on third party pipelines to transport natural gas. A significant decrease in the production of natural gas could have a significant financial impact on Buckeye's operations and cash flows. Buckeye's results could be adversely affected by volatility in the price of refined petroleum products and the value of natural gas storage services. Buckeye's business is exposed to credit risk, against which Buckeye may not be able to adequately protect. Risks Inherent in Ownership of Our Common Units Cost reimbursements due our general partner, MainLine Management, may be substantial and will reduce our cash available for distribution to our Unitholders. Our Unitholders do not elect our general partner or vote on our general partner's directors. An affiliate of our general partner owns a sufficient number of Common Units to allow it to block any attempt to remove our general partner. BGH GP owns a controlling interest in us and owns our general partner and can determine the outcome of all matters voted upon by our Unitholders. The control of our general partner may be transferred to a third party, and that party could replace our current management team, in each case, without unitholder consent. Increases in interest rates may cause the market price of our Common Units to decline. If in the future we cease to manage and control Buckeye through our ownership of the general partner interests in Buckeye, we may be deemed to be an investment company under the Investment Company Act of 1940. You may not have limited liability if a court finds that Unitholder action constitutes control of our business. We are directly dependent on Buckeye for our growth. As a result of the fiduciary obligations of Buckeye's general partner, which is our wholly owned subsidiary, to the Unitholders of Buckeye, our ability to pursue business opportunities independently may be limited. Our credit agreement contains operating and financial restrictions that may limit our business and financing activities. Risks Related to Conflicts of Interest Buckeye GP owes fiduciary duties to Buckeye and Buckeye's Unitholders, which may conflict with our interests. The fiduciary duties of our general partner may conflict with the fiduciary duties of Buckeye's general partner. Potential conflicts of interest may arise among our general partner, its affiliates and us. Our general partner has limited fiduciary duties to us and our Unitholders, which may permit it to favor its own interests to the detriment of us and our Unitholders. Our reimbursement of expenses of our general partner will limit our cash available for distribution. Our partnership agreement contains provisions that reduce the remedies available to Unitholders for actions that might otherwise constitute a breach of fiduciary duty by our general partner. It will be difficult for a Unitholder to challenge a resolution of a conflict of interest by our general partner or by its audit committee. Our general partner's affiliates may compete with us. Our executive officers face conflicts in the allocation of their time to our business. Our general partner may cause us to issue additional Common Units or other equity securities without your approval, which would dilute your ownership interests. Our general partner has a call right that may require you to sell your Common Units at an undesirable time or price. Tax Risks to Common Unitholders If BGH or Buckeye were treated as a corporation for federal income tax purposes, or if BGH or Buckeye were to become subject to a material amount of entity-level taxation for state tax purposes, then BGH's cash available for distribution to Unitholders would be substantially reduced. If the IRS contests the federal income tax positions that BGH or Buckeye take, it may adversely affect the market for Common Units or Buckeye limited partner units, and the costs of any contest will reduce cash available for distribution to our Unitholders. Unitholders may be required to pay taxes on their share of BGH's income even if they do not receive any cash distributions from BGH. Tax gain or loss on disposition of our Common Units could be more or less than expected. The reporting of partnership tax information is complicated and subject to audits. There are limits on the deductibility of BGH's losses that may adversely affect Unitholders. Tax-exempt entities and foreign persons face unique tax issues from owning Common Units that may result in adverse tax consequences to them. BGH treats each purchaser of our Common Units as having the same tax benefits without regard to the Common Units purchased. The IRS may challenge this treatment, which could adversely affect the value of the Common Units. The sale or exchange of 50% or more of BGH's capital and profit interests during any twelve-month period will result in the termination of BGH's partnership for federal income tax purposes. Unitholders may be subject to state and local taxes and return filing requirements as a result of investing the Common Units. Unitholders may have negative tax consequences if BGH defaults on its debt or sell assets.

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1359055--3/14/2008--Buckeye_GP_Holdings_L.P.