By Jennifer Loren, The Oklahoma Impact Team

OKLAHOMA CITY -- Selling puppies is big business in Oklahoma, and yet it's completely unregulated. An effort to change that has created a nasty dog fight at the state Capitol.

Oklahoma is the second worst puppy mill state in the country, ranked only behind Missouri. But for two years, attempts to pass so-called puppy mill legislation in Oklahoma have failed. Legislators hope a change in strategy this year may hit bad breeders where it hurts worst, in the pocket book.

High-volume dog breeding operations are difficult to penetrate. But an undercover videographer was able to gain access to several operations in southeastern Oklahoma. He said the conditions were filthy and in some operations there were as many as 400 dogs kept in cages all day, every day. Their sole purpose is to reproduce.

Most operations like these are hidden away in rural Oklahoma. But all of them contribute to a very visible multi-million dollar industry. Puppies are now being sold on specialty Web sites, where dogs are bought, sold and shipped like any other product.

"We're talking about big-time breeding operations," said state Senator Patrick Anderson.

Senator Anderson estimates that well over 100, 000 puppies are sold and shipped out of Oklahoma every year. And while current law requires breeders to charge sales tax and report their income, he says many of them do not. That's why he's introduced Senate Bill 1712, dubbed the Black Market Breeders Bill.

Anderson's bill would regulate the industry and collect the estimated $20 million in taxes the state is losing each year because breeders are selling their dogs on the black market.

"A lot of these transactions are cash transactions," said Anderson.

The bill establishes a commission that would regulate breeders who have 11 or more female dogs. Those breeders would pay a fee and be licensed. Violators could be fined and charged with misdemeanors. Breeders would also be required to get a sales tax permit so the Oklahoma Tax Commission could track their sales.

"We're trying to take it as a very business-like approach," said Anderson.

That approach, Anderson hopes, will force the worst breeders, the puppy millers, to either shut down or clean up.

In a November 2008 puppy mill bust in Delaware County, deputies found almost 100 dogs, all of them filthy and malnourished, some dead. Several poodles and cocker spaniels were kept in cages with no food or water.

"It was brutal. Dogs eating dead dogs, dogs starving, pregnant, injured, blind, you name it," said Jennifer Thumser of The Humane Society. She was on sight to help find homes for the animals.

"You can not imagine what goes through someone's mind that they think this is acceptable," said Ruth Steinberger with the Oklahoma Alliance for Animals.

Steinberger runs the Oklahoma Alliance for Animals' mobile spay and neuter clinic. She's been called out to some of the worst puppy mills in Oklahoma. As an outspoken opponent of animal cruelty, she's pushed for legislation for years. She says our lack of laws has made Oklahoma a magnet for bad breeders.

"It's one story after the next with people who are coming over state lines. We have no regulations so we're becoming a default zone," said Steinberger.

Veterinarian and State Representative Lee Denney has tried for three years to get so-called puppy mill legislation passed. She says breeders have made it clear they don't want to be regulated.

"They want to continue doing their work in the shadows of the state of Oklahoma and they don't want regulation," said Denney.

She says the lobby against so-called puppy mill legislation has been too powerful.

"I think the breeders have done a good job of coming together to fight this legislation," said Denney.

Last year a large group of breeders with Oklahoma Pet Professionals rallied at the state Capitol. Led by a professional out-of-state spokesman, they passionately let their legislators know they were against Denney's bill.

"And they don't realize that we're up here really fighting for our lives," said Adair dog breeder Gary Phillips.

Denney says even the NRA lobbied against her bill, although she's not sure why. Denney said she got a phone call from the president of a major airline, asking about her bill. She said he was worried the legislation would hurt his business. According to Denney, he told her his airline transported 500 puppies a week out of the Tulsa airport alone.

Lobbyist Michael Costin has been arguing against the legislation already this session. He claims the bill is unfair to good breeders.

"They are egregious civil rights violators," said Michael Costin, a lobbyist for breeders.

Costin's wife is a breeder who sells puppies on the Internet. He says it's unlawful for a board made up of private citizens to regulate breeders' businesses and punish them for violations.

"I personally believe that what is going on is, maybe well-intended, but the directions that it is going is absolutely off the tracks," said Costin.

Costin admits some breeders have even threatened violence.

"They're talking about, if these bills pass, that there's going to be gun play," said Costin.

Senator Anderson says good breeders have nothing to fear with this legislation and should support it because it will put puppy mills out of business.

Animal advocacy groups are trying to drum up support for the legislation to make their voice stronger. They're holding meetings across Oklahoma, recruiting supporters and hoping to make a difference at the Capitol this year.

"We believe that if we don't get grass root support that the legislature will continue just to react to some of the really vocal people who are profiting from animal cruelty in the state," said Claudette Self of The Oklahoma Humane Federation.

The commission created by Senate Bill 1712 would be funded by the fees they assess, meaning it won't cost the state any money to enforce. It has passed out of committee and heads to the Senate floor next.