Photo above is of a Gaston, Oregon, puppymill raided by the Washington County Sheriff's Office and Animal Control in April of 2008. Over one-hundred chihuahuas were kept in crates and bins in their own urine and feces throughout the rat-infested house.
The incident helped spark new legislation in Oregon to restrict large-scale puppymills. Nearby Washington state likewise passed a similar puppymill ban; in one month alone, 400 dogs were rescued from puppymills in Washington.
In 2007, not one state had laws to restrict puppymill activity, but in 2008/2009, besides Washington and Oregon, legislation was passed in Pennsylvania, Louisiana, Virginia and California. Each year since, more states have joined the battle.
Humane Society's FAQ on Puppy Mills
Legislation has been proposed in many states to control the proliferation of puppymills but state representatives have a tendency to defeat, postpone, or otherwise undermine animal protection legislation. This page keeps tabs of what states are doing and not doing:
United Animal Nations Legislation