Hopes for passenger rail service linking Oklahoma City and Tulsa suffered a major setback Monday.

Stillwater Central Railroad failed to meet an Aug. 4 deadline for establishing a six-month pilot program to provide daily passenger rail service between Del City and Sapulpa, Tim Gatz, executive director of the Oklahoma Department of Transportation announced Monday.

"The department is disappointed that the pilot program didn't launch, as it would have helped determine the long-term viability of passenger service on this line, but also understands the obstacles Stillwater Central is facing," the transportation department said in a news release. "ODOT will continue to be open to and explore other options from the private sector for a cost-effective solution for future passenger service."

Stillwater Central Railroad will be required to pay the state $2.8 million in liquidated damages, Gatz said, adding that discussions are currently in progress regarding how the payments will be made.