When you use points for an award, like for example in the OP's trip SAN-VAC, you pay in points 15,000 for the entire trip since they want a sleeper. Yet a sleeper is only available as far as Seattle. After that point, there is no sleeper. So AGR, when asked, provides the next best accomodation, a business class seat.

When you're paying cash/credit card, you are only buying the sleeper from SAN-SEA, therefore the trip from SEA-VAC is priced separately even when on the same reservation. So business class is an option at an additional cost, but it is not automatically included.