© 2019 Elsevier B.V. A comprehensive investigation of the Sydney Trains railway network has been carried out to control and minimize rail degradation, especially squat defects. Squat occurrence was analysed with respect to the parameters of traffic operation and track geometry. Detailed metallurgical examination of the ex-service rails revealed a possible connection between brittle White Etching Layers (WELs) and the occurrence of squats in the running band of the rail. Initiation of squats was found to be associated with the progression of surface cracks in the WELs. Furthermore, two distinguishable types of WELs were found, based on different track operational conditions. These are described as Thermally Produced WEL (TP-WEL) which was found in heavy braking regions, and Severe Deformation WEL (SD-WEL) which was found in track regions under steady traffic speeds. In addition to the explanations based on thermal phase transformation and severe plastic deformation, the arcing phenomenon associated with electrical leakage at the wheel/rail interface was considered an alternative formation mechanism of WELs observed on rails. A revised rail grinding strategy was proposed by considering the formation of WELs and addressing it through more regular, relatively shallow grinding to effectively control squat defects.