Hearing Officer Karen Green has decided that Wal-Mart failed to prove that it could accommodate the 12,000 extra car trips per day that the store was estimated to generate.
Wal-Mart announced plans almost a year ago to build one of its Supercenters on 20 acres in northeast Bend, generating opposition from Bend residents who held rallies, showed movies and placed signs in their front lawns in protest.
The group said that Wal-Mart's traffic study contained serious errors and that the proposed mitigation plan did not meet state standards.
The hearing officer said that the street improvements Wal-Mart agreed to wouldn't be sufficient and that a road-widening project at a set of railroad tracks might not be feasible.
Wal-Mart spokeswoman Jennifer Holder said an appeal was an option.
An appeal would go to the Bend City Council, which could hear it or send it on to the state Land Use Board of Appeals. If the council hears it, an appeal could continue to the state board.