Yes, Norway is a party in all air travel related treaties and regulations within EU. Otherwise Norwegian would not even be allowed to operate the ARN-JFK route (and many others within EU but outside Norway)

EC 261/2004 also states clearly that it is passenger's choice between rerouting and refund. However certain LCC's has been known to trying to weasel themselves out when they have totally cancelled some routes. But I'm confident that Norwegian would offer rerouting at least if the reason of cancellation is just some temporary technical difficulties.