By Kiah Collier

Attorney General Ken Paxton has dropped a lawsuit against the city of Brownsville over a 2010 ordinance that imposed a $1 per-transaction fee on plastic bags offered at grocery stores and other retailers.

The dismissal, announced Thursday, came as part of a settlement in which the city agreed to repeal the ordinance, which it had enacted in an effort to cut down on waste.

Paxton — wading into yet another fight over local control — sued the city last October, calling the $1 fee an “illegal sales tax.” According to the settlement agreement, Brownsville continues to deny that claim and maintains that it had "the full authority to enact the use fee ... and denies that the plastic bag user fee made the subject of this litigation constitutes an unlawful tax."

Still, Paxton said that he was "pleased that the city of Brownsville agreed to stop taxing its citizens through an unlawful bag fee."

“Cities and municipalities in Texas are obligated to follow the rule of law. And in this case, a law passed by the Legislature clearly prohibits a sales tax on bags," Paxton said in a statement.

The law Paxton appears to be referring to is at the heart of another case pending before the Texas Supreme Court over a plastic bag ban in the city of Laredo.

In a ruling the city appealed, a state appeals court cited a state law that says cities cannot “prohibit or restrict, for solid waste management purposes, the sale or use of a container or package.” It noted that the bags businesses distribute are viewed as “containers” under the law.

As the state's highest civil court decides whether to hear the case, some state lawmakers have pushed legislation that would explicitly prohibit cities from banning single-use plastic bags or charging fees for them. But several bills — including at least one filed this year — have yet to gain much traction.

About a dozen Texas cities have enacted ordinances restricting plastic bag use, including Austin and South Padre Island.