Kentucky lawmakers consider economic 'stress tests' for foreign hostilities, new review of adversary investments

Representative Scott Sharp asked the committee to authorize an economic "stress test" the Kentucky Office of Homeland Security would run to estimate how outbreaks of hostilities in regions such as the Indo‑Pacific or Europe would affect the state's economy. "What this does is it directs the Kentucky Office of Homeland Security to conduct a stress test for the Indo Pacific and the European regions," Sharp said, adding he has received suggestions to include Latin America as well.

The measure, identified in committee as House Joint Resolution 110 (HJR 110), passed the House last session but failed to clear the Senate, Sharp said. He described the exercise as a forecasting tool that could lead the General Assembly to craft policies to mitigate economic fallout from disrupted supply chains, commodity markets or other shocks. "So that way, when we understand where the issues are, us as the General Assembly can craft policy to help mitigate those...effects economically," he said.

Retired U.S. Navy Rear Admiral James Price, a former intelligence officer, told the committee that U.S. critical infrastructure faces sustained espionage and cyber threats from state and nonstate actors and voiced support for HJR 110. "We are very, very vulnerable to" attacks on industrial control systems and data exfiltration, Price said, citing past breaches including the 2015 OPM incident and recent disclosures about intrusions into research institutions. He noted public guidance from the Cybersecurity and Infrastructure Security Agency (CISA) encouraging jurisdictions and utilities to prepare to operate disconnected from the internet in an emergency.

Committee members sought practical details. Senator Boswell and others asked whether HJR 110 would create a new agency or provide funding. Sharp said it would task the Kentucky Office of Homeland Security with conducting tabletop exercises and assessments and that the office had not requested additional funds. "This is part of their job," Sharp said. Price added the Kentucky National Guard’s Title 32 cyber unit could participate in exercises.

Sharp also presented House Bill 283, which he said would direct the Kentucky Office of Homeland Security’s intelligence fusion cell to review foreign investments tied to adversary countries (he cited the regulatory list in 22 CFR 126.1) and, if concerns arise, refer them to federal DHS or the state attorney general. "If they come up with any problems with it, they're to take that information and send it either to the federal Department of Homeland Security or to the AG's office for action," Sharp said.

Members raised related economic concerns: Representative Grama stressed semiconductor supply links to Kentucky employers, Representative King asked whether social‑media disinformation campaigns should be considered, and Representative Lehman pointed to prior investment episodes that raised questions about foreign capital and pension exposure. Price and Sharp said the proposed measures are intended to surface vulnerabilities and coordinate response rather than to immediately impose new regulatory burdens.

The committee did not take a formal vote on either measure during the meeting. Members were encouraged to coordinate with Sharp as he refines language; Sharp said both measures could change before refile in a subsequent session.

The committee was scheduled to hear additional presenters later in the agenda and adjourned after the day's business.