SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 and 15(d) of the
                         Securities Exchange Act of 1934


Date of Report (date of earliest event reported):  July 23, 2002 (June 19, 2002)


                                U.S. ENERGY CORP.
--------------------------------------------------------------------------------
              Exact Name of Registrant as Specified in its Charter)

            Wyoming                     0-6814                  83-0205516
------------------------------    -------------------     ----------------------
 (State or other jurisdiction         (Commission            (I.R.S. Employer
       of incorporation)               File No.)            Identification No.)


     Glen L. Larsen Building
     877 North 8th West
     Riverton, WY                                                 82501
-----------------------------------------------------     ----------------------
 (Address of Principal Executive Offices)                       (Zip Code)


       Registrant's telephone number, including area code: (307) 856-9271


                                 Not Applicable
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               (Former Name, Former Address or Former Fiscal Year,
                          if Changed From Last Report)








ITEM 5.  OTHER EVENTS

     U.S. Energy Corp. and its majority-owned subsidiary, Crested Corp., d/b/a
USECC, were served with a lawsuit on June 19, 2002, filed in the U.S. District
Court of Colorado (Case No. 02-B-0796(PAC))by Phelps Dodge Corporation and its
subsidiary, Mt. Emmons Mining Company (MEMCO), over contractual obligations from
USECC's agreement with Phelps Dodge's predecessor companies, concerning a mining
property in Colorado.

     The litigation stems from agreements that date back to 1974 when U.S.
Energy and Crested Corp. leased mining claims on Mt. Emmons near Crested Butte,
Colorado to AMAX Inc., Phelps Dodge's predecessor company. The claims cover one
of the world's largest and richest deposits of molybdenum. AMAX reportedly spent
over $200 million on the acquisition, exploration and mine planning activities
on the Mt. Emmons properties. In counter and cross-claims filed in the U.S.
District Court of Colorado, USECC contends that Phelps Dodge and its
subsidiaries committed several breaches of contracts related to the agreements,
including breach of fiduciary obligations and covenants of good faith and fair
dealing. USECC also contends Phelps Dodge is guilty of violating federal and
state antitrust laws when it purchased Cyprus Amax. Phelps Dodge and MEMCO have
20 days from July 9, 2002 or date of service to answer USECC's claims.

     The complaint filed by Phelps Dodge and MEMCO seeks a determination that
Phelps Dodge's acquisition of Cyprus Amax was not a sale. Under a 1986 agreement
between USECC and AMAX, if AMAX sold MEMCO or its interest in the mining
properties, U.S. Energy and Crested would receive 15% (7.5% each) of the first
$25 million of the purchase price ($3.75 million). In 1991, Cyprus Minerals
Company acquired AMAX to form Cyprus Amax Minerals Co. USECC's counter and
cross-claims allege that in 1999, Phelps Dodge formed a wholly-owned subsidiary
CAV Corporation, for the purpose of purchasing the controlling interest of
Cyprus Amax and its subsidiaries (including MEMCO) at an estimated value in cash
and Phelps Dodge stock exceeding $1 billion and making Cyprus Amax a subsidiary
of Phelps Dodge. Therefore, USECC asserts the acquisition of Cyprus Amax by
Phelps Dodge was a sale of MEMCO and the properties that triggers the obligation
of Cyprus Amax to pay USECC the $3.75 million plus interest.

     A second counterclaim by USECC rejects the claim by Phelps Dodge that it
and its predecessors, Cyprus Amax and AMAX Inc., had mistakenly paid royalties
to USECC since January 1991. In 1984, AMAX began paying the cash equivalent
(half each to U.S. Energy and Crested Corp.) of 700,000 pounds of molybdenum per
year as an advance royalty prior to the mine beginning production. In 1986,
USECC agreed to assist financially troubled AMAX and substantially reduced the
annual advance royalty to 50,000 pounds of molybdenum, so that AMAX could
continue to hold the properties and eventually bring them into production. AMAX,
Cyprus Amax and Phelps Dodge continued paying the annual advance royalties to
U.S. Energy and Crested Corp. until the payment due in July 2001, when Phelps
Dodge unilaterally ceased making the payments. Phelps Dodge and MEMCO seek a
declaratory judgment that the advance royalty payment obligation has terminated,
and further, that USECC should repay $948,109 of royalties paid to USECC from
1993 through 2000, because those payments were made by mistake.


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     The third issue in the litigation is whether USECC must, under terms of a
1987 royalty deed, accept Phelps Dodge's and MEMCO's forth-coming conveyance of
the Mt. Emmons properties back to USECC, which properties now include a plant to
treat mine water, costing in excess of $1 million a year to operate in
compliance with State of Colorado regulations. Phelps Dodge's and MEMCO's
threatened reconveyance would require USECC to assume the operating costs of the
water treatment plant. USECC refuses to have the water treatment plant included
in the return of the properties because, the USECC counterclaim argues, the
properties contractually must be in the same condition as when they were
acquired by AMAX before the water treatment plant was constructed by AMAX.

     As added counterclaims, USECC seeks (i) damages for defendants' breach of
covenants of good faith and fair dealing; (ii) damages for defendants' failure
to develop the Mt. Emmons properties and not protecting USECC's rights as
revisionary owner of the mining rights to the properties, (iii) damages for
unjust enrichment of defendants; (iv) damages for breach of the defendants'
fiduciary duties owed to USECC as revisionary owner of the property, and for
neglecting to maintain the mining rights and interests in the properties; and
(v) for damages relating to defendants' actions in violation of federal and
Colorado anti-trust and constraint of trade laws.

     USECC also seeks a declaratory judgment of its rights under and liabilities
under the agreements affecting the Mt. Emmons properties; an injunction against
defendants prohibiting the conveyance of the properties to USECC with the water
treatment plan; an injunction against further waste of the properties by the
defendants; an injunction requiring defendants to divest their molybdenum
holdings (including the Mt. Emmons properties); and an injunction requiring
defendants to assist USECC in mining molybdenum from the Mt. Emmons properties.

     Except for the parties' claims regarding payment of the $3.75 million due
on the sale of MEMCO, payments of royalties, and responsibility going forward
for payment of the operating costs of the water treatment plan, the financial
impact to U.S. Energy Corp. and Crested Corp. of favorable or unfavorable
outcomes in the litigation presently is not determinable.




                                   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 hereunto duly authorized.

                                                   U.S. ENERGY CORP.


Dated: July 23, 2002                        By:    /s/   Daniel P.  Svilar
                                                 -------------------------------
                                                 DANIEL P. SVILAR, Secretary


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