The NOx Budget Program rules set forth the New Jersey component of a regional program for reducing emissions of oxides of nitrogen (NOx) in order to make progress toward achieving the National Ambient Air Quality Standard for ozone. The NOx Budget Program consists of a regionwide NOx emissions budget or emissions "cap" for sources subject to the program and establishes a regionwide trading mechanism in order to provide a more flexible and cost-effective means to comply with the program.

On October 27, 1998, USEPA published its final finding that NOx emissions from sources in 23 jurisdictions (including New Jersey) significantly contribute toward the non-attainment of the National Ambient Air Quality Standard (NAAQS) for ozone in one or more downwind states throughout the eastern portion of the United States. In this Federal Register publication, (63 FR 57356), USEPA also required the 23 jurisdictions to adopt and submit revisions to the State Implementation Plan (SIP) in order to assure that the sources in each jurisdiction emit NOx at a level that does not significantly contribute to non-attainment or interfere with the maintenance of the ozone NAAQS in a downwind State. This USEPA requirement is herein called the "NOx SIP Call". One component of the NOx SIP Call that each State may implement is a NOx Cap and Trade Program, similar to New Jersey’s current rule, that would take effect in the ozone seasons of the year 2003 and each year thereafter.