<i> As for Caltrain challenging FRA rules they have a slim chance in hell, you won't change federal law , unless they seperate the entire operation and run it as light rail.</i>
Actually, the FRA already agreed to change things for Caltrain.. Given UP runs about 3 trains a day, they'll get time separation, easy. Or, PTC and mixed operation.
Of course, Caltrain can just sever their connection with the rest of the world, kick UP off the line, and that's that (no need to regauge, though they could, just to drive home the message, if they wanted). They own the tracks. No UP on the line, no connection to the rest of the world...No FRA to worry about. And there's not much the feds can do to stop that - they're not going to take on the state, since they really can't anyway.