The 22-year-old had been targeted by Red Bull to make the switch to F1 in 2023, but the plan stalled over the issue of him securing the mandatory superlicence.
Herta only had 32 of the 40 points that were necessary for him to get an automatic licence, and a push by Red Bull for the FIA to give him special exemption looked like it was going to fail.
Even though avenues remained open for Herta to get the necessary points - potentially by taking part in one of several international winter series - Red Bull had decided that it was not worth wasting extra time going down that route.
One risk was that if he was unlucky in the winter series he chose, then he could fail to get the points needed and that would leave both him and AlphaTauri in a tricky spot only a few weeks before the start of the season.
Speaking to Motorsport.com's sister site Motorsport-Total, Red Bull motorsports advisor Helmut Marko said that the collapse of the Herta plan meant F1 had missed an opportunity to build extra interest in the US market.
"It's a shame that people don't realise what value an American driver, especially a guy like Colton Herta, would have for the booming American market, especially with three F1 races," Marko said.
Red Bull tried everything it could to ease Herta's path, and was even involved in helping arrange a run for him in Alpine's private test next week.
However, with the FIA indicating it will not budge on the superlicence matter, Red Bull had now decided there is little point in pursuing its original plan.
It is understood that Herta's planned test run with Alpine has been cancelled, now that the F1 seat is off the table.
Marko said it was "incomprehensible" that a winner of seven IndyCar races had to prove his qualification to safely drive an F1 car due to a bureaucratic points system, especially since he could easily have run in a number of free practice sessions to further prepare himself for his first race.
As well as Red Bull not wanting to spend more time trying to overcome the superlicence situation, there was also pressure mounting from Herta's Andretti Autosport IndyCar team on a definitive decision.
Michael Andretti's outfit needed to know if it had to find a replacement for Herta for 2023 and didn't want to be left high and dry if a final call was made in a few weeks' time.
Furthermore, there was a risk that if Herta ended his Andretti deal early to pursue F1, and then failed to get the superlicence, then he could be left without a drive in anything next year.
While Red Bull previously stated that if it did not get Herta then it would keep Pierre Gasly at AlphaTauri, the possibility of a deal with Alpine for the Frenchman is not off the table yet.
However, AlphaTauri needs a suitable replacement for Marko, who will ultimately decide, to approve.
According to information from Motorsport-Total.com, a possible Gasly successor will not come from the team's own junior team.
Formula 2 racer Liam Lawson gained his first FP1 experience at Spa, but did not push for promotion to the regular cockpit, while Jehan Daruvala (sixth in Formula 2), Ayumu Iwasa (ninth) and Dennis Hauger (11th) also still need time.
"It's being evaluated right now what possibilities there might be," says Marko in reference to the second AlphaTauri cockpit.
However, it appears certain that Mick Schumacher is not among the candidates under consideration.
If no suitable candidate is found, Gasly will stay with AlphaTauri for another year before his current Red Bull contract expires.
