With range gating, you can do a lot with LIDAR in rain and fog.[1][2] It's possible to ignore all reflections out to a given distance, and you can adjust that distance. There's been a lot of work on this for the military. Automotive LIDAR units don't have this yet, but it could easily be added. If you have both range gating and "first and last", where you get the time of the first and last reflection, you can easily distinguish fog and rain from hard objects. The distribution of first and last times on fog and rain should look like Gaussian noise, while a hard target has near-equal first and last.

This is something we'll probably see in second-generation self-driving cars. With range-gated LIDAR and millimeter radar, self-driving cars will do far better in fog and heavy rain than humans do.

[1] http://www.sensorsinc.com/applications/military/laser-range-... [2] http://www.obzerv.com/en/range-gating-technology/core-expert...