By Russell Gold 

U.S. regulators are urging railroads to change the way they deal with wheel defects, saying the problem may have caused a fiery oil-train derailment in Illinois last month.

Despite multiple warning signs, a train carrying crude oil from North Dakota to Philadelphia continued to travel on a potentially faulty wheel, according to a preliminary federal investigation.

Twenty-one cars of a BNSF Railway Co. oil train derailed near Galena, Ill., 160 miles west of Chicago. Several cars ruptured during the accident and the oil inside caught fire, generating large explosions.

On Friday, the Federal Railroad Administration issued a safety advisory pointing to a broken wheel and telling railroads to act more aggressively to fix similar defects found on other trains.

According to investigators, a trackside device flagged the oil train's defective wheel about 130 miles before the derailment. A month before the accident, other similar devices registered a reading on this railcar's wheel at a level that indicated there was a flat spot that made it "condemnable," according to the safety advisory.

Despite the reading, BNSF didn't break any industry or federal rule. Industry guidelines suggest that the wheel be replaced the next time the tank car was sent for repairs.

In late March, BNSF began slowing down its trains that haul crude oil to 35 miles an hour in cities with over 100,000 residents, according to a letter sent to its customers. The railroad stepped up the frequency of track inspections to 2 1/2 times the rate required by FRA regulators along certain waterways.

BNSF also said it would act faster to take railcars out of service if its own equipment detects a problem with a car, locomotive or wheels, a spokesman said. "It's clear to us that given the recent incidences, along with our own in Galena, that more needs to be done," he said.

The rail agency's new safety advisory said railroads should strengthen their criteria for handling wheels with potentially critical defects, and suggests they replace wheels showing flat spots more quickly. Government regulators also noted that defective wheels can put stress on train tracks that can lead to breaks or cracks in the rail.

The safety advisory was one of several advisories and a new emergency rule issued Friday by the U.S. Transportation Department as part of its continuing effort to make trains carrying crude oil safer.

The new policies also address train speed limits and information about the cargo. In the next few weeks, the government is expected to issue new rules about the design and build of tank cars carrying hazardous liquids.

A spate of derailments and fiery explosions involving trains transporting crude oil from North Dakota has prompted the government to undertake a wide-ranging review of its rules. The volume of oil hauled by railroads has mushroomed in recent years, increasing to nearly 374 million barrels last year from 20 million barrels in 2010, according to the U.S. Energy Information Administration.

An emergency order, also issued Friday by the Federal Railroad Administration, places a 40 mph speed limit in urban areas for trains carrying significant volumes of flammable liquid, such as crude oil. Several North American railroad operators had already agreed to a similar, voluntary speed limit last year after multiple oil train derailments.

U.S. regulators are also seeking to bring greater transparency to the crude being hauled across the country. In another advisory issued Friday, the rail agency and the Pipeline and Hazardous Materials Safety Administration said they want railroads to maintain records tracking the crude from the wells where it is pumped from the ground all the way to the refineries buying the oil. Those records should include what energy company pumped the oil out of the ground, what trucking company or pipeline carried it to the railroad terminal, and the results of any tests performed on the crude to determine its volatility and flammability.

Betsy Morris contributed to this article.

Write to Russell Gold at russell.gold@wsj.com

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