The U.S. Department of Interior said it would make around 830,000 net acres of land in Colorado, Utah and Wyoming available for oil leasing.
Developers under the terms of a record-of-decision released by the Interior Department need to show they can get oil out of the ground in an economically and environmentally sound way before they can get full access to federal lands.
U.S. Interior Secretary Ken Salazar said the measure would "ensure that we acquire critically important information" about shale technology before developers go ahead in the Western states.
Natural Resources Committee Chairman Doc Hastings, R-Wash., said the decision adds another layer of red tape to U.S. oil development.
"Since taking office, President Obama has stalled, delayed and hindered oil shale research and development projects that could allow access to 1.5 trillion barrels of American oil, enough to provide the United States with energy for the next 200 years," Hastings said.
The Interior Department says domestic oil production has increased every year since Obama took office in 2009. His critics say much of that increase in because of policies enacted by the Bush administration.