If the railroad is not subject to FRA regulations, they can pretty well do want they want assuming it's within the coverage of their liability insurance.
On a FRA governed railroad, it gets real interesting real fast as to what regulations apply. There are clearly defined standards for carrying passengers on a train, and for employees working near the track. But this falls into a no-man's-land in the middle. You MIGHT get away with having a railroad qualified employee leading the group and one following behind. The motor car operators group (NARCOA) has established a decent reputation as to their internal rules and I believe typically operate with a railroad escort who holds the track use authority.
Where it really gets funky is if the train operations and the rail rider operators are occupying the same track without clear limits of separation between them. The FRA won't even let light and heavy rail vehicles use the same track without a clear temporal separation otherwise requiring a minimum physical distance. Since this appears to be a deal set up by the landlord, I would be concerned that they may be creating an unwelcome liability and regulatory issue for WMSR.
It now takes at least two days of classroom training just to let a new railroad employee near the tracks. Any contractor doing any work near the tracks is subject to the oversight of a qualified railroad flagger.
It's kind of like the current fad of building bike and hiking trails next to the tracks. Unless someone else is providing patrols and maintaining a good fence between the trail and tracks, all it does is creates a regulatory and liability issue for the rail operator.
