New Jersey Gov. Phil Murphy’s administration has drastically scaled back the scope of a state law aimed at barring government dealings with Russian-affiliated businesses following a loss in federal court.

Now, the state is simply matching federal sanctions, effectively gutting the effort by Murphy and lawmakers to punish Russia for its 2022 invasion of Ukraine.

Shortly after the invasion, Murphy signed a bill into law that would blacklist companies in the state that were determined to be affiliated with Russia and neighboring Belarus. The law would have barred those companies from state and local government contracts, tax breaks, investment in the state’s pension system among other government dealings.

The law was initially so wide-ranging that companies that had a parent company that owned a Russian subsidiary could be subject to the state-level sanctions. That scenario ensnared the American subsidiary of Japanese electronics company Kyocera, which the state took steps to blacklist under the law.

But in December, the company won a permanent injunction from U.S.........

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