These are the Velocity T&Cs:
View attachment 4563
You can see there that the $30 fee is only for reward seats booked over the phone. Comp upgrades are not reward seats (in fact, you can use the upgrade as long as there is a J seat available at the time of requesting it, it does not have to be a reward seat or specific fare bucket).
[edited post to correct my appalling grammar - my mother would have been ashamed!]
I found with my last comp upgrade (no fee) that initially I could select any flight with business class seats available. However, when I tried to change my flight the velocity premium desk could only move me to flights where H class was available as the comp upgrades are booked as 'reward' seats- my updated itinerary showed this too. Had no problem changing at the airport on day of departure but would have been nice to have a bit more flexibility beforehand.