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A tanker continues to burn as fire fighters douse rail containers in downtown Lac-Mégantic, Que., on July 7, 2013.MOE DOIRON/The Globe and Mail

Transport Canada did not consider whether crude oil in mass amounts could be highly explosive when it decided not to place any new safety standards on trains like the one that exploded this summer in Lac-Mégantic, Que.

The federal agency said it was not aware of concerns U.S. regulators raised four months before the accident that some oil being shipped by rail was highly explosive and unusually corrosive.

The concerns of U.S. officials are among the extensive warning signs that were missed about the potential dangers of shipping crude oil from North Dakota in mass quantities on trains, an investigation by The Globe and Mail has revealed. On June 6, a train carrying 72 cars of the oil exploded in the middle of Lac-Mégantic, killing 47 people, in the worst rail accident in Canadian history.

"Transport Canada was not aware of these concerns prior to the tragic incident in Lac-Mégantic," the department said in a statement after The Globe's revelations on Monday. "They were shared with Transport Canada afterward."

On Wednesday, Auditor-General Michael Ferguson levelled heavy criticism at the federal department, saying: "Transport Canada needs to address the significant weaknesses" in its oversight of the rail industry. In the past five years, crude oil shipments by rail have grown exponentially in North America as trains have rushed to fill a void created by a shortage of pipelines. However, this new era of crude by rail has sprung up with very little oversight from regulators and government.

Despite rapid growth in shipping mass quantities of oil on trains in recent years, The Globe found the government chose not to apply added emergency provisions for these trains and did not include oil on a list of dangerous products that require extra care and attention.

Asked why the government did not consider crude oil dangerous enough to require special emergency measures, Transport Canada said it looks at characteristics such as "toxicity, inhalation hazard and flammability" to make that determination.

Transport Canada is now acknowledging this new method of shipping oil is more dangerous. On Tuesday, after The Globe revealed that oil shipped from the Bakken formation in North Dakota and parts of Manitoba and Saskatchewan was highly volatile, the government announced a formal risk assessment of hazardous goods transportation and issued a request for proposals to study these risks.

Under federal rules, certain hazardous materials considered especially dangerous require an emergency response assistance plan, or ERAP, which can help in a derailment by ensuring that equipment such as flame-retardant foam trucks is on hand in towns through which the shipments pass. The lack of an ERAP indicates crude oil was not considered a high risk.

Transport Canada has also acknowledged it asked for no new conditions on mass oil shipments, even though some oil trains now stretch for nearly two kilometres.

As early as 2010, North Dakota geologists were investigating highly corrosive tendencies of the oil. Last spring, the Washington-based Federal Railroad Administration sent a letter to a U.S. petroleum association warning of "severe corrosion" making tank cars vulnerable to rupture, and oil that was highly explosive.

Responding to a request for details of the safety measures the government requires for oil trains, Transport Canada said they must have "proper documentation, safety marks, reporting and training." However, those factors contain no added safety measures from the days before railways were shipping mass quantities of crude. The Lac-Mégantic derailment occurred when the parked train rolled down a hill into town after its brakes failed.

Speaking to a parliamentary committee on transportation, Mr. Ferguson said his office would "seriously consider" doing a follow up review of rail safety at Transport Canada after issuing a report last week questioning enforcement. The department is supposed to perform regular safety audits of railways, but the report found Transport Canada completed just a quarter of the audits it planned for a recent three-year period, leaving VIA Rail and many smaller railways with limited oversight.

Mr. Ferguson said Transport Canada provided his office with an action plan late last week explaining how the department plans to address his recommendations by early 2016. Transport Canada did not immediately respond to a request for a copy of the plan. "A number of long-standing and important safety issues remain," Mr. Ferguson said. "And it's taking too long to resolve them."