The initial idea for a ban on genital waxing was proposed by the Board of Cosmetology and Hairstyling after two women reported being hospitalized for infections following brazilians; one of the women filed a lawsuit.
Technically, genital waxing has never been allowed, according to the Huffington Post article. Waxing the face, neck, abdomen, legs and arms are permitted, but because bare-it-all "Brazilians" weren't specifically banned, state regulators haven't enforced the law.
The Chicago Tribune article says the officials may have redacted the idea because they realized how silly they looked. New Jersey's Division of Consumer Affairs Director David Szuchman said in his letter to the cosmetology board that he believes there are "alternate means to address any public health issues" and he encouraged the board to begin a review of the training needed to safely provide Brazilian bikini waxes.
For some hilarious commentary, including a reference to NCLB, check out the NY Post story.