Shep Sanders is located in the Arid Badlands at Outpost Arid Hills, near the transition point to the Arid Hills. He stands in the metal shack leaning against a wall next to a medical vendor, where he keeps an eye on the bandits in the area.
Shep Sanders was once a foreman for the Dahl corporation. After Dahl pulled out of Pandora, Shep and his family were left behind. According to Dr. Zed, Sledge skinned Shep's entire family, and made a tent out of their hides. During the events between Borderlands and Borderlands 2, Sanders sold out New Haven's location to Hyperion, resulting in the town's destruction by Handsome Jack's forces. In revenge for this act, Brick gouged Shep's eyes out and cracked his skull open, leading to Brick being banished from Sanctuary for his violence.
Shep still oversees the operation of Zephyr Substation. He will help Vault hunters gain access to Sledge as well as provide several side missions. The side missions all involve getting Zephyr Substation up and running again.
In Borderlands 2, during the mission 3:10 to Kaboom, the Sheriff of Lynchwood mentions that Shep Sanders betrayed New Haven to Hyperion, leading to its destruction. One of the radio logs inside Hyperion Truth Network Station mentions this as well. Shep's betrayal caused Brick to murder him in a fit of rage.