As artificial intelligence grows more powerful and potentially more dangerous, a freshman Democratic lawmaker wants New Jersey to impose new safeguards, but business leaders warn that the proposed regulations could drive up costs, stifle innovation, and push AI companies out of the state.
Assemblyman Andrew Macurdy (D-Summit) is sponsoring three bills aimed at regulating AI, arguing that the technology is advancing so rapidly that government safeguards are struggling to keep pace.
“AI can bring enormous societal benefits; it also carries the potential for catastrophic threats,” Macurdy said during an Assembly committee hearing Monday.
The committee discussed the three measures but took no votes.
A5089, the “AI Image Disclosure Act,” would require disclosures for certain AI-generated content. A5090, the “GAI Accountability Act,” would impose civil penalties on generative AI platforms for harmful activities, including the exploitation of children. A5275 would require certain AI developers to make disclosures to the state attorney general.
Macurdy pointed to warnings from former employees of OpenAI and Anthropic about the speed of AI development and competitive pressures pushing companies to release increasingly powerful technology.
He also cited recent cybersecurity evaluations in which AI models gained unauthorized access to outside computer systems, arguing that the technology has advanced significantly since he introduced the bills in May.
In July, OpenAI disclosed that models undergoing internal cybersecurity testing had circumvented safeguards, accessed the internet, and compromised systems belonging to Hugging Face, an AI development platform.
Anthropic subsequently reported three incidents in which its Claude models gained unauthorized access to real-world systems during cybersecurity evaluations. The company attributed the incidents to a misconfiguration that left testing environments connected to the internet when they were supposed to be isolated.
“It doesn’t take much imagination to envision increasingly serious harm as this technology evolves,” Macurdy said.
He argued that exposing AI companies to civil liability would give them a financial incentive to strengthen safeguards.
“If the companies faced the real possibility of civil liability and it impacts their bottom line, they will take stronger measures,” Macurdy said.
Jack Ramirez, a research analyst for the New Jersey Business and Industry Association, said the organization supports reasonable AI safeguards but warned that the proposed regulations could impose substantial costs on smaller developers and startups.
“For our small and medium-sized artificial intelligence companies, this not only would be felt in their bottom lines but would be detrimental,” Ramirez said.
Ramirez was particularly concerned about A5275, arguing that New Jersey-specific disclosure requirements could create problems for companies developing AI products intended for use nationwide.
“A product that is inherently global or can cross states creates a multitude of problems for organizations trying to implement this tool and enter this market,” Ramirez said.
“We disagree with the concept of patchwork,” he added, expressing NJBIA’s preference for a uniform federal regulatory framework rather than separate rules in individual states.
Ramirez warned that companies might even decide not to offer certain AI products in New Jersey rather than absorb the costs of complying with state-specific requirements.
Despite opposing the legislation, Ramirez praised Macurdy’s willingness to work with the business community.
“The assemblyman has been absolutely amazing to work with so far,” he said.
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