After winding through a long county regulatory process, members of the Jefferson County Zoning Board of Appeals turned down a conditional-use permit for the development, saying it was not compatible with the area where it was going to be built.
The asking price for the property at one time was $3.6 million.
The developers are appealing the decision through the state Supreme Court, according to officials trying to save the site from development.
Members of Shepherdstown Battlefield Preservation Association Inc., a local organization that is trying to save the battlefield, have been raising money in an attempt to purchase the site and have raised $125,000.
The group was working to obtain a $250,000 state grant, but that was not approved due to a problem at the Jefferson County government level, said Ed Dunleavy, president of the group.
Discussion about the battlefield is on today's agenda for the Jefferson County Commission.
Dunleavy said Wednesday that determining the national significance of the battlefield is straightforward because that is documented.
If that is successful, the next steps would be congressional approval to enlarge either Harpers Ferry National Historical Park or Antietam National Battlefield to take in the site and obtaining funding to purchase it, Dunleavy said.
Shepherdstown Battlefield Preservation Association would hopefully sell it to the federal government if it can purchase it, Dunleavy said.
"We're looking at still another two or three years (of work)," Dunleavy said.
The battle fought in Shepherdstown on Sept. 19 and 20, 1862, brought to an end the Army of Northern Virginia's Maryland Campaign and was a significant factor in Gen. Robert E. Lee's decision to retreat deeper into the Shenandoah Valley, according to Byrd's office.
There were various northern and southern troop movements in the Trough Road area after Lee pulled his army back across the Potomac River and on Sept. 20, the two sides clashed in open fields around the Far Away Farm property, Dunleavy has said.
At least 96 soldiers were killed.
"West Virginia is home to many great landmarks that are a significant part of our nation's history. I am pleased to be working with the Shepherdstown Battlefield Preservation Association to help initiate this National Park Service study," Byrd, D-W.Va., said in the release.