1359055--3/2/2010--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 petroleum demand and distribution may adversely affect Buckeye s business. In addition, the current economic downturn could result in lower demand for a sustained period of time. Competition could adversely affect Buckeye s operating results Mergers among Buckeye s customers and competitors could result in lower volumes being shipped on its pipelines and stored in its terminals, thereby reducing the amount of cash it generate. Buckeye may incur liabilities from assets it has acquired. A significant decline in production at certain refineries served by certain of Buckeye s pipelines and terminals could materially reduce the volume of refined petroleum products it transports and adversely impact its operating results. Potential future acquisitions and expansions, if any, may affect Buckeye s business by substantially increasing the level of its indebtedness and contingent liabilities and increasing the risks of it being unable to effectively integrate these new operations. Buckeye s rate structures are subject to regulation and change by the FERC. Climate change legislation or regulations restricting emissions of greenhouse gases or setting fuel economy or air quality standards could result in increased operating costs or reduced demand for the refined petroleum products, natural gas and other hydrocarbon products that Buckeye transports, stores or otherwise handles in connection with its business. 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. DOT regulations may impose significant costs and liabilities on Buckeye. Buckeye s business is exposed to customer credit risk, against which it may not be able to fully protect. Terrorist attacks could adversely affect Buckeye s business. Buckeye s operations are subject to operational hazards and unforeseen interruptions for which it may not be insured. Buckeye may not be able to realize the benefits of the organizational restructuring commenced in the second quarter of 2009, which could adversely impact its business and financial results. 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. Buckeye s results could be adversely affected by volatility in the value of natural gas storage services, including hub services. Buckeye s results could be adversely affected by volatility in the price of refined petroleum products. Buckeye s risk management policies cannot eliminate all commodity risk and any noncompliance with Buckeye s risk management policies could result in significant financial losses. 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 and a default thereunder could result in a change in control of Buckeye GP. 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 Buckeye and 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 Our and Buckeye s tax treatment depends on their status as a partnership for federal income tax purposes as well as not being subject to a material amount of entity-level taxation by individual states. If the IRS were to treat either us or Buckeye as a corporation for federal income tax purposes or they were to become subject to additional amounts of entity-level taxation for state tax purposes, then our cash available for distribution to you would be substantially reduced. If the IRS contests the federal income tax positions that we or Buckeye take, the market for our Common Units may be adversely impacted and the cost of any IRS contest will reduce our cash available for distribution to you. You will be required to pay taxes on your share of our income even if you do not receive any cash distributions from us Tax gain or loss on the disposition of our Common Units could be more or less than expected. Tax-exempt entities and non-U.S. persons face unique tax issues from owning Common Units that may result in adverse tax consequences to them. We will treat each purchaser of Common Units as having the same tax benefits without regard to the actual Common Units purchased. The IRS may challenge this treatment, which could adversely affect the value of the Common Units. We prorate items of income, gain, loss and deduction between transferors and transferees of Common Units each month based upon the ownership of Common Units on the first day of each month, instead of on the basis of the date a particular Common Unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our Unitholders A Unitholder whose Common Units are loaned to a short seller to cover a short sale of Common Units may be considered as having disposed of those Common Units. If so, the Unitholder would no longer be treated for tax purposes as a partner with respect to those Common Units during the period of the loan and may recognize gain or loss from the disposition. We will adopt certain valuation methodologies that may result in a shift of income, gain, loss and deduction between the general partner and the Unitholders. The IRS may challenge this treatment, which could adversely affect the value of Common Units.

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1359055--3/2/2010--Buckeye_GP_Holdings_L.P.