After years of tough talk, some Northeastern states last week signaled a willingness to retreat from demands that Midwestern and Southern states reduce their air pollution, which blows into the Northeast. In the wake of legal setbacks, one proposal from the Northeastern states for settling a dispute would accept nitrogen oxide emissions at a rate 67 percent higher than what they had previously demanded. Enviros are angry about the apparent retreat on nitrogen oxide, which contributes to acid rain and ozone pollution in the Northeast. The EPA has generally sided with the Northeastern states in the dispute, but is now pressing for a compromise.