When Gov. Jerry Brown walked into a fundraiser for his military academy at Scott’s Seafood on the Oakland waterfront the other day, he was also stepping into the middle of a long-running fight over public access to the bay that involves some big names and a $841,000 state fine against the restaurant.

The luncheon gathering of 265 mostly corporate guests in a pavilion on the waterfront walkway at Jack London Square raised an estimated $2.1 million for the Oakland Military Institute, a charter school that Brown established when he was mayor of Oakland.

“There is no other venue in Oakland that can really accommodate our needs,” military institute Development Director Sally Parsons said of the restaurant.

That restaurant pavilion, however, is a problem for the Bay Conservation and Development Commission, a state agency that has major clout when it comes to waterfront development. After what officials described as “an exhaustive and exhausting” review, the commission in December hit Scott’s owner Ray Gallagher with an $841,000 fine — the largest penalty it has ever levied — for operating the pavilion without a proper permit.

Gallagher has lawyered up to contest the fine, and he has no shortage of friends. Some of the biggest hitters in East Bay politics have long used Scott’s for fundraisers.

“No comment,” was all the governor said when asked about holding the event at a site that a state agency has deemed an illegal venue.

Scott’s Seafood has been a mainstay tenant at the long-struggling Jack London Square for 35 years. It first won approval from the bay commission in 1997 to put up a canvas tent-like pavilion in the public plaza — on the condition that it limit its use to 73 events a year.

But four years ago, Gallagher replaced the canvas covering with retractable metal walls. He also extended the roof and added storage space — all without a commission permit.

Neighboring merchants complained not only that the pavilion was illegal, but also that the restaurant was hosting far more events on the public spot than allowed under its original permit for the canvas structure.

Enter former Oakland City Councilman Ignacio De La Fuente who — after a couple years of failed attempts by consultants and lawyers to negotiate a settlement — came on board as an unpaid consultant to his old friend Gallagher.

Also working behind the scenes to try to reach a deal was Zack Wasserman, the governor’s handpicked chairman of the 27-member bay commission. He has had a long history with Brown, serving as his lawyer and even helping administer the nonprofit that paid the governor’s rent while he was living in a loft in Sacramento.

Finally, after months of talks, the bay commission’s six-member enforcement committee unanimously recommended in October that Scott’s pay a $250,000 fine. In return, the restaurant would be allowed to hold 124 events a year — including 20 for nonprofits such as Brown’s academy.

But the deal blew up when it went before the full commission — which heard an earful from critics, including a representative of Jack London Square’s new property management team — and soon after the agency’s staff issued the restaurant its $824,000 violation notice. Now the matter has been shipped back to the enforcement panel, which will meet Thursday to reconsider it.

A defiant Gallagher argues that he is being penalized for providing a relatively inexpensive place for nonprofits to hold their fundraisers.

“I support my community — and that’s where I broke the rules,” Gallagher said. “This is important to my clients and my employees. It’s the principle of it.’’

But David Lewis, head of the environmental group Save the Bay, said it doesn’t matter whom Gallagher lets use the pavilion.

“They are claiming they should be given dispensation because of who they rent the facility to and how charitable they are,” Lewis said. “That is not the way a permit works — this is a legal obligation.”

Whatever the commission eventually decides may not be the last word. If things don’t go his way, Gallagher is making noises about heading to court.

DiFi’s way: Aspiring Senate hopefuls got some bad news the other day when Sen. Dianne Feinstein sent out invites for a “Feinstein for Senate 2018” campaign kickoff fundraiser March 18 in Bel-Air.

“We need Senator Feinstein in the Senate now more than ever,” Sim and Debra Farar, the couple who are chairing the event, wrote in an email last week to the California Democrat’s backers.

The $1,000- to $5,400-a-head brunch is being co-hosted by a group of business, tech and entertainment figures, including “Agents of S.H.I.E.L.D.” actress Christine Adams, Hollywood studio executive Robert Daly and Kirith Prady, wife of “Big Bang Theory” executive producer Bill Prady.

A number of Democrats have been eyeing the seat amid speculation that the 83-year-old Feinstein might call it quits after her term is up. The rumor mill got cranking when Feinstein’s husband, Richard Blum, was diagnosed with lung cancer last year, and went into overdrive when Feinstein had a pacemaker installed in January.

But the senator recently signaled she is up for running again, telling KQED-FM’s Scott Shafer: “If I can ... continue to produce, then I will continue to produce. If I believe I can’t, either by health or any other way, I won’t. But as long as I believe I can, I will.”

San Francisco Chronicle columnists Phillip Matier and Andrew Ross appear Sundays, Mondays and Wednesdays. Matier can be seen on the KPIX TV morning and evening news. He can also be heard on KCBS radio Monday through Friday at 7:50 a.m. and 5:50 p.m. Got a tip? Call (415) 777-8815, or email matierandross@sfchronicle.com. Twitter: @matierandross