It's not against the law to stand up - but it's against club rules. The club can set out virtually any rules i wishes (providing it doesn't contravene the law in doing so - e.g. racism, sexism etc).
Of course, HOW the club chooses to deal with people that do stand is another matter again. They tolerate standing 'in the moment' - natural reaction to excitement, but not standing for the sake of it.
I can sympathise with those loving to stand and recreate 'some' of the feel of terraces, but I refer you to a line in the Taylor report (Hillsborough tragedy)...
paraphrased -
"Fans were not aware of the very small margin of safety that standing afforded".
Basically - he's explaining that standing feels quite safe and folks assume "not much can go wrong here" - but in fact, it can QUICKLY go wrong with a few idiots pushing at the back etc.
If making sure EVERY City fan comes home from the game safe and sound means having to sit, it's a price I'll pay.
We never want another Hillsborough like tragedy - sounds dramatic I know, but then again, it WAS dramatic (and tragic)
Anyway, back to the topic... it's POSSIBLE someone's got crossed wires and they're referring to the survey that City carried out after he Villareal game asking about MOVING some seats (not removing). Basically it was asking if it's fair to move some of the East stand folks to make way for the away fans etc