The Assembly voted 56-19 for the bill Thursday.
Hydraulic fracturing, commonly known as fracking, involves blasting chemical-laced water deep into the ground.
Some lawmakers and environmentalists say public health and natural resources would be endangered if waste from processes done in Pennsylvania enters New Jersey.
But Jim Benton, executive director of the petroleum council in New Jersey, told lawmakers last week that New Jersey is capable of addressing the issue through existing regulations. He also says fracking has brought down the cost of energy and provided economic benefits.
Data on the Pennsylvania Department of Environmental Protection website show some fracking waste has already entered New Jersey.