A federal appeals court in San Francisco sent the state of Alaska back to “looking at all its options” after a May 4 ruling halted a proposed 51-mile, $500-million highway from Juneau to a new ferry landing in Katzehin.

The decision by the 9th U.S. Circuit Court upholds a 2009 lower-court opinion that the project’s final environmental impact statement (EIS) was not valid because it did not include an alternative that would improve transportation with existing assets, namely upgraded ferry service. The planned project—a major increase from the original 2006 estimate of $100 million—would have built the East Lynn Canal Highway from the end of Glacier Highway in Juneau around Berners Bay to the new ferry terminal. New ferry service would have then shuttled vehicles to Haines and Skagway.