In Wyoming, it's the sage grouse. In Colorado, it's the lesser prairie chicken. In the Northwest, it's the Washington ground squirrel. Across the country, a growing number of species are finding themselves at the epicenter of a new battle being waged by environmentalists and developers. The issue—species being threatened by encroaching human development—is nothing new, of course. What is new? The encroachers aren't the usual suspects—say, a sprawling McMansion community developer—but the environmentally friendly wind-energy industry.

Wind energy has been touted as cost-effective to produce clean energy as well as jobs. That promise, along with new government subsidies, has helped wind turbines pop up on hills and fields throughout America. But not every environmentalist is happy about that development. Critics charge that wind-energy development can cause habitat fragmentation—a displacement of a species that can eventually reduce its numbers—as well as the deaths of birds and bats (a species that is especially vulnerable due to its low reproductive rates) that collide with the wind turbines' massive rotor blades. A 2007 study by the National Academy of Sciences puts the number of birds killed each year at about 20,000 to 30,000. That's a low estimate, says Michael Fry of the American Bird Conservancy. According to his group, turbines kill three to 11 birds per megawatt of wind energy they produce. Right now, there are about 20,000 megawatts produced in the United States, which can mean—at worst—up to 220,000 bird fatalities a year. With wind energy expected to produce 20 percent of this country's energy by 2030, output would grow tenfold and, environmentalists worry, deaths could increase at a similar rate. Whatever the number, the wind industry is hoping to avoid damaging its green reputation and is struggling with finding the right solution.

Hanging over their heads is Altamont Pass, the sprawling Northern California wind farm whose 4,000 wind turbines have sliced up more than 4,500 birds a year—about 1,300 of them birds of prey like golden eagles—for the past few decades. Altamont may not be a fair comparison—its wind turbines are older and smaller, and thus believed to be more dangerous to the birds—but larger, updated turbines and efforts at reducing bird deaths in the region have yet to prove effective. And other wind farms have been causing bird fatalities too, though in much smaller numbers than at Altamont.

Until recently, the industry has had little guidance in how to proceed with development without harming wildlife. Regulations are mostly imposed by states or local authorities, whose patchwork guidelines vary from stringent to lax. The Wind Turbine Guidelines Advisory Committee, established in 2007 under the U.S. Fish and Wildlife Service, is proposing federal recommendations to reduce wind development's effect on wildlife. Composed of wind-industry members, wildlife officials, and federal authorities, the committee will present the recommendations to the secretary of the interior for review in October. The recommendations are voluntary, but according to David Stout of the U.S. Fish and Wildlife Service, the guidelines will be "unprecedented in terms of companies agreeing to hold themselves to a higher standard."

But not everyone is convinced. "I don't believe the voluntary guidelines will work," says Fry. "The Department of Justice has chosen never to prosecute anyone for the Altamont fatalities. If you have ongoing violation of the Eagle Act and the Migratory Bird Treaty Act and no prosecutions, the wind industry eventually just decides that they've got some sort of get-out-of-jail-free card."

Industry leaders insist they are taking the issue seriously. Late last year, independent of the proposed federal guidelines, they formed the American Wind and Wildlife Institute in an effort to mitigate wind development's impact on the environment. "There was a consensus that if we were going to increase America's renewable energy base to the levels that President Bush, and now President Obama, have set as goals for the country, that we had to do business differently," says the AWWI's president, Kraig Butrum.

What does that mean? Mostly supporting research that can determine the extent to which an area being considered for wind development can harm wildlife. The institute, whose management includes members of environmental organizations, is building a national mapping tool with The Nature Conservancy to identify key wildlife corridors which may be affected by new wind farm development. It also supports studies of ways to reduce wildlife fatalities.  Curtailment—or shutting down the turbines at times when bats or migratory birds appear and are more vulnerable to collision—and ultrasonic bat deterrents are methods being studied.*

Portland, Ore.-based Iberdrola Renewables has been experimenting with curtailment at its 34.5-megawatt Casselman, Pa., wind farm with some success, reducing bat mortality by 70 percent in a 2008 study. The company, which created the industry's first Avian and Bat Protection Plan in 2008, has also pioneered a radar technology that detects approaching migratory birds and shuts down the turbines accordingly. The technology is being used at the company's 200-megawatt wind farm near the Texas Gulf Coast, a particularly vulnerable region for birds, because it is at the tail end of the central flyway, a primary avian migration route.

But environmentalists argue that these measures aren't enough, especially in areas like the Texas coast. "The best option [for reducing wildlife fatalities] is to avoid putting it in those locations in the first place," says Doug Inkley, a senior scientist at the National Wildlife Federation.

Members of the wind industry think that the issue may be, well, overblown. "We understand that certainly there are impacts, but they need to be viewed in the larger context," says Laurie Jodziewicz, the manager of siting policy for the American Wind Energy Association. "It's not wind energy versus nothing; it's wind energy versus some other form of energy which will also invariably have an impact—potentially more of an impact than a wind project."

* Newsweek editor's note: We originally suggested that the AWWI engages directly with wind developers on whether or not to abandon a potentially harmful wind project. The organization provides the research and the mapping tools with which developers can choose to continue a project, but it does not directly advise them.