The National Assembly does not have legislative competence in relation to the provision and regulation of rail services apart from in relation to financial assistance in certain limited circumstances (see the exceptions listed under paragraph 10 in Part 1 of Schedule 7 to the Government of Wales Act 2006).
The Welsh Ministers have executive functions in relation to rail under the Railways Act 2005 (RA 2005) which amended the Railways Act 1993. In particular, RA 2005 gave a greater role to the Welsh Ministers in relation to franchising and financial assistance for rail services in Wales. Section 10 of RA 2005 provides that the Secretary of State may only enter into a franchise agreement which includes 'Wales-only' rail passenger services if the Welsh Ministers join with him or her as a co-signatory to the agreement. When the Strategic Rail Authority was abolished in 2005, its rights and liabilities under the current Wales and Borders franchise (operated by Arriva Trains Wales) were transferred jointly to the Secretary of State and the Welsh Ministers. This is the only franchise which at present provides or includes 'Wales-only' services, i.e those that both start and end in Wales and don’t make any other scheduled calls outside Wales.
The Secretary of State must consult the Welsh Ministers before entering into a franchise agreement under which the passenger services to be provided include 'Welsh services', i.e those which start in Wales, end in Wales or otherwise make at least one scheduled call in Wales.
Section 10 of RA 2005 provides a power for the Welsh Ministers to provide financial assistance connected with Welsh services both to a franchisee under a franchise agreement to which they are a party and also, more widely, to other parties.
Subject to certain exceptions, the Welsh Ministers have power to make orders (TWA Orders) under section 1 of the Transport and Works Act 1992 in relation to the construction and operation of railways, tramways, trolley vehicles and certain other guided transport systems. TWA Orders may authorise matters ancillary to these guided transport systems, such as the compulsory acquisition of land, the creation or extinguishment of rights over land, and the charging of tolls and penalty fares. If, however, an application relates to both England and Wales (for example, a proposed new railway straddling the border) it would fall to be determined by the Secretary of State.