Property owners may be entitled to compensation if the state government fails to act to halt pollution that is a “known and longstanding public health hazard,” Maryland’s highest court has ruled.

In a case that advocates say puts the state on notice to enforce environmental laws, a divided Court of Appeals declared in late January that a Caroline County woman can pursue her claim that she lost her family’s lake and campground because state and local officials didn’t address septic contamination from a nearby town.

The 4-3 ruling is the latest twist in the six-year legal struggle of Gail Litz, who is suing the state of Maryland and the Eastern Shore town of Goldsboro contending that their neglect of a long-running septic pollution problem cost her the business and property that had been in her family for decades.

The court’s majority said that the Maryland Department of the Environment’s failure to enforce a consent order requiring the town to fix its residents’ failing septic systems could be seen as an “inverse condemnation” if Litz can prove it caused her to lose the campground and her 140-acre property.

The state’s Court of Special Appeals, an intermediate court, had decided earlier to let Litz’s lawsuit against the town proceed. But that court dismissed her case against the state, saying MDE’s inaction was not grounds under state law to demand compensation from the government for depriving her of her livelihood and land. The intermediate court said that passive inaction was not a taking, or condemnation, of her property; in order for a government entity to be responsible for condemnation, it had to actually contribute to the pollution problem.

But the highest court ruling disagreed. So Litz can now also pursue her claims against the state. The decision is significant not just because the state has resources that small towns like Goldsboro do not, but also because the state has issued hundreds of similar orders to fix pollution, but doesn’t enforce them all.

Three judges dissented from the majority opinion, saying they believed property can only be “taken” by some government action, not by failing to enforce laws. No Maryland law or prior court decision has established that government inaction can lead to liability, the dissenters wrote. They warned that Litz’s “novel theory” of government taking property by doing nothing could enable private citizens to seek a wide range of legal actions when they perceive laws aren’t being enforced.

The ruling allows Litz to have what she’s wanted all along: a chance to argue her case to a jury of her peers in Caroline County, her home for most of her 67 years.

“The exciting thing is that it sets a precedent, so people all over … can do this to get relief,” she said. “When the state says they are going to do something, they need to do it.”

The court’s majority looked at laws and legal precedents in California, Minnesota and Florida that found those states’ inaction in the face of a duty to protect could make the government liable for harm. The court then ruled that the same principle applied under Maryland law: A state’s failure to act can condemn property, just as if it had taken people’s homes to build a new highway.

“Maryland said, ‘look, we’re going to be of the view that if a government’s failure to do something affects a person’s property, they have a claim for inverse condemnation,’” said Litz’s attorney, Philip W. Hoon of Chestertown, who took the case along with Baltimore litigator G. Macy Nelson after several environmental groups declined to represent Litz. “Now, thanks to their decision, we start the trial we wanted to have six years ago.”

In its 29-page opinion, the appeals court majority stated that Litz still must prove she deserves compensation. But, writing for the majority, Judge Glenn T. Harrell Jr.  concluded: “It is not frivolous to hypothesize that state, county, and municipal agencies may have duties to step in to protect the public health.’’

MDE spokesman Jay Apperson said state officials were still “digesting the decision” and had no comment on it.

Litz’s father, William Councell, bought the 28-acre freshwater Lake Bonnie and surrounding farmland in 1948. By the early 1960s, he opened the property as a campground, which was popular for its summer bluegill fishing and its winter ice-skating parties. Litz worked at the campground as a young girl, and inherited the business and the land from her father.

By the 1980s, though, both Litz and Councell were sensing a problem with the water in Lake Bonnie, which comes from two local streams in Goldsboro and then discharges into the Choptank River near its headwaters. Sometimes, Litz recalled, there were suds in the lake. The town’s septic systems were failing, and officials determined the only way to solve the problem was to hook the town of about 150 residents to a public sewage treatment system.

But in 1985, and again in 1988, the townspeople rejected such plans. Even though federal and state grants would have paid close to 90 percent of the costs, townspeople maintained they couldn't afford the rest. Even 10 percent of the costs could be crippling for such a small and cash-strapped town. Each household might have had to pay hundreds or even thousands of dollars more each year in water and sewer bills.

In Virginia’s Shenandoah Valley, residents in Woodstock and Berryville saw sewer and water rates quadruple when the towns put in new plants to upgrade antiquated systems. Those towns are about 10 times larger than Goldsboro, allowing more people to pay into the system and diffuse some of the cost. Still, in the case of Woodstock, the entire city council was voted out in large part because of the increases to cover the $31 million wastewater plant. But, town officials said, there was no choice; like Goldsboro, Woodstock was under a consent order to upgrade its wastewater plant.

In Goldsboro’s case, Caroline County’s health director, Lester W. Coble Jr., voiced concern that nitrate, a key pollutant in septic systems, was showing up in residents’ drinking-water wells. Nitrate-rich water is dangerous for infants younger than 6 months old. When ingested, it can cause “blue baby syndrome,” a condition in which youngsters do not get enough oxygen in their blood. Their skin turns bluish, and they may become irritable or lethargic. In severe cases, it can cause coma and death if not treated promptly.

In a 1988 letter to the state’s environment secretary, Coble wrote: "Community sewage and community water are needed for this town.”

By 1995, Coble wrote to the secretary again, saying the problem in Goldsboro had reached "crisis proportions." He urged the state to enter into a consent order that would force the town to hook up to public water and sewer.

Later that year, he ordered Lake Bonnie closed for swimming because the water contained unsafe levels of fecal coliform bacteria, an indicator of contamination by human waste.

The lake never re-opened.

In 1996, Goldsboro signed a consent order with MDE acknowledging the septic systems were failing. The order outlined a schedule for the town to construct and connect residents to a public sewer system. The state would fine Goldsboro $100 a day if it did not comply.

But the state never enforced the order. Steven R. Johnson, MDE’ s chief lawyer, told the Bay Journal in an interview four years ago that it would have been “malpractice” to say the state should have enforced the agreement. He called the order “meaningless” once the town decided not to fund the system. How could the state fine a town that had no money, he asked? Instead, Johnson said, the department tried to work with Goldsboro to find a way to finance a sewage treatment plant.

State and local officials say they were hamstrung by the high costs of fixing the problem, and a lack of funds.  One plan floated in 2009 would have cost $21 million to build a treatment plant in Goldsboro big enough to replace the failing septic systems in that town and three other nearby communities.

Another plan would have extended a sewer line under the Choptank River and connected the town to Denton’s sewage plant, sparking fears of river pollution should the line rupture. There was some hope that a developer who wanted to build 500 homes near Goldsboro would construct a plant to solve the problem, but county commissioners balked when the developer would not also hook up to nearby towns on failing septics. As discussions wore on, the real estate market slumped, and the development never came to pass.

Litz, meanwhile, said she did everything she could to keep her lakefront campground running without its star attraction. She also served on the local sewer committee. But by 2010, with Goldsboro no closer to solving its septic problem and her campground losing visitors, she fell behind on her mortgage and lost the property to foreclosure.

In 2015, Caroline County officials broke ground on a $19 million sewage treatment plant in Greensboro, with a sewer line to be extended to Goldsboro by 2018. Nearly 40 years after county health officials first discovered the failing septic systems in Goldsboro, government is finally addressing the problem, with state and federal funds covering the bulk of the cost.

In the lawsuit she filed six years ago, Litz asked for $7 million in damages. The lake was her retirement, she said, and her only chance of passing something to her children. She now lives outside Orlando, FL., with her son and his family.

“The campsite was my life, and my purpose, and everything centered around it. When I lost it, I lost my purpose,” she said. “That was my children’s inheritance, and I worked for it all my life.”

Ridgeway Hall, vice chair of the Chesapeake Legal Alliance, a nonprofit group offering free legal help to environmental groups and citizens, called the court’s decision “absolutely the right call.” The state has acknowledged that it has issued hundreds of consent orders requiring pollution be curbed or cleaned up, but doesn’t enforce them all strictly. This decision, Hall said, could encourage governments to take those orders more seriously.

“It’s very hard to know how many situations are analogous,” Hall said. “But one constitutional use of this will be, environmental groups can go to the government and say, ‘Look, you have the duty to do something, and if you don’t, you could be liable.’”

Litz’s situation is, if not unique, at least uncommon. In most cases, pollution harms a group of people — children suffering asthma attacks from breathing smoggy air, for instance, or fishermen losing their livelihood because algae-clogged tributaries have depleted their catch. Not too many Marylanders own their own lakes. And pollution typically does not harm one person in an area disproportionately more than another. Still, Hall said, the case could have widespread implications.

“It will give lawyers heart to know that there is now Maryland case law supporting the claim of inverse condemnation when there’s a failure to act in the face of a duty to act,” he said.

The septic pollution problem in northern Caroline County has harmed more than just Lake Bonnie. It further degraded the Choptank River, which has struggled for decades with an influx of nitrogen and phosphorus from farm runoff. Though the river’s water quality has improved in recent years, the Midshore Riverkeeper Conservancy’s 2014 report card found those gains came mainly in the lower river, not the upper reaches near Lake Bonnie.

The Lake Bonnie case “was a failure by the state on so many levels,” said Jeff Horstman, the conservancy’s executive director. “Compliance and enforcement has largely been a weakness at the Maryland Department of the Environment for many reasons, budget being a main issue.”

Litz can never get back what she lost. A local resident, Johnathan Merson, now owns Lake Bonnie. And even when the new treatment plant is built, Caroline County’s septic problem won’t be entirely solved, either. Henderson, Marydel and Templeville -- other small towns near Goldsboro with failing septic systems -- were supposed to be connected to the new Greensboro sewage plant. As of now, there isn’t enough money to include them.