Firing the latest shot in what has been a long and heated argument, U.S. Energy Corp. and Crested Corp., doing business as USECC, reported Tuesday that in October it filed a cross-appeal of the judgment entered by the U.S. District Court of Colorado on Aug. 1, which ordered RWE Nukem, Inc. and its subsidiary, Cycle Resource Investment Corp., to pay USECC $20,044,183.

The feud dates back to June 1991, when Nukem initiated arbitration proceedings against USECC concerning disputes involving their jointly owned Sheep Mountain Partners (SMP). Under the partnership, USECC was to produce uranium from SMP’s mines in Wyoming and Nukem was to market uranium worldwide for the SMP partnership.

After a lengthy hearing, the arbitration panel awarded USECC damages and impressed a constructive trust in favor of the SMP partnership over the uranium purchase contracts that Nukem entered into with three republics of the former Soviet Union because Nukem “wrongfully” used partnership assets to acquire the contracts.

The panel’s order and award were confirmed by the U.S. District Court in a judgment and various orders, which were appealed by Nukem twice to the 10th Circuit Court of Appeals. The court ruled against Nukem and affirmed the District Court’s judgment and orders in both appeals. As a result, the U.S. District Court appointed a special master to obtain an accounting of all profits Nukem realized on the former Soviet Union contracts, the location and poundage of the uranium and the status of the former Soviet Union’s purchase rights.

On Oct. 3, Nukem filed its third appeal to the 10th Circuit Court of Appeals, appealing the Aug. 1, 2003 judgment against it as well as appealing both the court’s orders of July 30, 2003 and Sept. 10, 2003 denying Nukem’s motion to correct certain findings or statements in the court’s order of July 30, 2003.

“We are claiming that essentially the federal court erred in interpreting the master’s report and we are asking the 10th Circuit to correct it,” said Jim Cornell, president of RWE Nukem Inc. “We are essentially claiming that U.S. Energy is getting paid three times over for the same penalty. We are not arguing the penalty so much as the fact that you can’t recover three times on the same matter. I think that is really the long and short of it.”

In response to Nukem’s third appeal, U.S. Energy and Crested Corp. on Wednesday reported that they have filed their notice of cross-appeal, likewise appealing the court’s judgment of Aug. 1, 2003; the court’s earlier order of July 30, 2003, and the court’s Sept. 11, 2003 order denying the plaintiffs’ post-judgment motion.

“Their cross-appealing is only basically a way to neutralize our appeal,” said Cornell. “I don’t think there is any merit to the claims that they are making. I think they probably appreciate the fact that they have a windfall and are trying to preserve it.”

According to USECC, the court found in this last order that the special master did not err in finding the purchase rights for uranium from the former Soviet Union republics were extinguished on Dec. 31, 2001. In addition, the District Court further refused to award U.S. Energy and Crested Corp. prejudgment interest of $7,901,672 on the $13,577,820 portion of the $20,044,183 judgment awarded them against Nukem.

“U.S. Energy and Crested Corp have decided to cross-appeal the judgment in view of Nukem’s third appeal in this case to the 10th Circuit. Nukem lost both previous appeals and we are confident that they will again be unsuccessful,” said Keith G. Larsen, president of U.S. Energy Corp. “However, U.S. Energy and Crested believe the cross-appeal provides an excellent opportunity to correct the errors that we believe were made when the District Court denied our post-judgment motion. If U.S. Energy and Crested are successful, the equitable award of $20,044,183 on the accounting ordered by the District Court, could be increased substantially.

“It should be noted that Nukem has already paid U.S. Energy and Crested approximately $16 million since this litigation began in 1991 and now we have an award for an additional $20,000,000,” added Larsen. “The companies are pursuing all of their options to conclude this case and compel Nukem to pay to U.S. Energy and Crested Corp. the full amount awarded them by the arbitration panel and the courts.”

As a subsidiary of RWE Nukem GmbH, RWE Nukem Inc. specializes in nuclear fuels trading together with its parent company.

U.S. Energy Corp. and its majority owned subsidiary, Crested Corp., operate through their subsidiary Rocky Mountain Gas, Inc. The group owns interests in over 310,000 gross acres prospective for coalbed methane in the Powder River Basin of Wyoming and Montana and acreage adjacent to the Greater Green River Basin in southwest Wyoming.

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