(a) Definitions
In this section:

(1) Dairy business
The term "dairy business" means a business that develops, produces, markets, or distributes dairy products.

(2) Initiative
The term "initiative" means a dairy product and business innovation initiative established under subsection (b).

(b) Establishment
The Secretary shall establish not less than 3 regionally-located dairy product and business innovation initiatives for the purposes of—

(1) diversifying dairy product markets to reduce risk and develop higher-value uses for dairy products;

(2) promoting business development that diversifies farmer income through processing and marketing innovation; and

(3) encouraging the use of regional milk production.

(c) Selection of initiatives
An initiative—

(1) shall be positioned to draw on existing dairy industry resources, including activities conducted by the National Dairy Promotion and Research Board and other dairy promotion entities, research capacity, academic and industry expertise, a density of dairy farms or farmland suitable for dairying, and dairy businesses; and

(2) may serve a certain product niche, such as specialty cheese, or serve dairy businesses with dairy products derived from the milk of a specific type of dairy animal, including dairy products made from cow milk, sheep milk, and goat milk.

(d) Entities eligible to host initiative

(1) In general
Subject to paragraph (2), any of the following entities may submit to the Secretary an application to host an initiative:

(A) A State department of agriculture or other State entity.

(B) A nonprofit organization.

(C) An institution of higher education.

(D) A cooperative extension service.

(2) Capacity of eligible entity
Any entity described in subparagraphs (A) through (D) of paragraph (1) shall be eligible to submit an application under that paragraph if the entity has—

(A) a capacity to provide consultation and expertise necessary to advance the purpose and activities of the proposed initiative; and

(B) expertise in grant distribution and tracking.

(3) Ineligible entity
A dairy promotion program shall not be eligible to host an initiative under this section.

(e) Partners

(1) In general
An entity described in subsection (d)(1) may establish as a partner an organization or entity described in paragraph (2)—

(A) prior to the submission of the application under that subsection; or

(B) after approval of the application, in consultation with the Secretary.

(2) Partner described
A partner under paragraph (1) shall be an organization or entity with expertise or experience in dairy, including the marketing, research, education, or promotion of dairy.

(f) Activities of initiatives

(1) Direct assistance to dairy businesses
An initiative shall provide nonmonetary assistance directly to dairy businesses through private consultation or widely available distribution—

(A) by the entity that hosts the initiative under subsection (d)(1);

(B) through contracting with industry experts;

(C) through the provision of technical assistance, such as informational websites, webinars, conferences, trainings, plant tours, and field days; or

(D) through research institutions, including cooperative extension services.

(2) Types of assistance
Eligible forms of assistance include—

(A) business consulting, including business plan development for processed dairy products, strategic planning assistance, and distribution and supply chain innovation;

(B) marketing and branding assistance, including market messaging, packaging innovation, consumer assessments, innovation in emerging market opportunities, and evaluation of regional, national, and international markets;

(C) assistance in product innovation, including the development of value-added products, innovation in byproduct reprocessing and use maximization, and dairy product production training, including in new, rare, or innovative techniques; and

(D) other nonmonetary assistance, as determined by the Secretary.

(3) Grants to dairy businesses

(A) In general
An initiative shall provide grants on a competitive basis to new and existing dairy businesses for the purposes of—

(i) modernization, specialization, and grazing transition on dairy farms;

(ii) value chain and commodity innovation and facility and process updates for dairy processors; and

(iii) product development, packaging, and marketing of dairy products.

(B) Grants to certain entities
An initiative may provide a grant on a noncompetitive basis to an entity that receives assistance under paragraph (1) to advance the business activities recommended as a result of that assistance.

(C) Grant amounts
Grants provided under this paragraph shall not exceed $500,000, unless a greater amount is approved by the Secretary.

(4) Consultation
An entity that hosts an initiative shall consult with the National Dairy Promotion and Research Board, the Secretary, and the Administrator of the Agricultural Marketing Service in carrying out the initiative.

(5) Conflict of interest

(A) In general
The Secretary shall establish guidelines and procedures to prevent any conflict of interest or the appearance of a conflict of interest by an initiative (including a partner of the initiative) during the allocation of direct assistance under paragraph (1) or grant funding under paragraph (3).

(B) Penalty
The Secretary may suspend or terminate an initiative if the initiative (including a partner of the initiative) is found to be in violation of the guidelines and procedures established under subparagraph (A).

(g) Distribution of funds

(1) In general
Using the funds made available to carry out this section, the Secretary—

(A) shall provide not less than 3 awards to eligible entities described in subsection (d) for the purposes of carrying out the activities under subsection (f); and

(B) is encouraged to award funds under subparagraph (A) in multiyear funding allocations.

(2) Use of funds
Not less than 50 percent of the funds made available under subsection (i) shall be allocated to grants under subsection (f)(3).

(3) Priority
An entity hosting an initiative shall give priority to the provision of direct assistance under subsection (f)(1) and grants under subsection (f)(3) to—

(A) dairy farms and dairy businesses with limited access to other forms of assistance;

(B) employee-owned dairy businesses;

(C) cooperatives; and

(D) dairy businesses that seek to create dairy products that add substantial value in processing or marketing, such as specialty cheeses.

(4) Requirement
Assistance or a grant shall not be made available to a foreign person making direct investment (as those terms are defined in section 801.2 of title 15, Code of Federal Regulations (or successor regulations)) in the United States in the case of—

(A) direct assistance under subsection (f)(1) that is provided to a specific dairy business and is not publicly available, as determined by the Secretary; or

(B) a grant under subsection (f)(3).

(5) Supplementation
To the extent practicable, the Secretary shall ensure that funds provided to an initiative supplement, and do not duplicate or replace, existing dairy product research, development, and promotion activities.

(h) Report
Not later than January 31, 2022, the Secretary shall submit to Congress a report on the outcomes of the program under this section and any related activities and opportunities to further increase dairy innovation.

(i) Authorization of appropriations
There is authorized to be appropriated to carry out this section $20,000,000 for each fiscal year.