When I want to "fire" a troublesome client, I respond to new RFQ's with pricing at 50 times my current markup. If it is government, I respond likewise with pricing and return their cumbersome terms of sale with numerous corrections.
I do the same, but in this situation charging exorbitant prices to one county while charging much lower prices to all the other counties may have had them in even more hot water with the AG than they are in now. A simple refusal was probably the safest play.