This is surely because your file is not valid JSON. JSON does not have a value type of "process." If you rewrite the file using the actual values rather than references, it should work.
So instead of:
"ip": process.env.VCAP_APP_HOST
use the value of the referenced variable, as in:
"ip": "10.0.0.1"
See http://www.json.org/ for how to write JSON.
EDIT
Since you need to update the contents of the JSON config file from variables that Cloud Foundry keeps in the process environment, you'll need to modify your EtherPad Lite installation to rebuild the settings.json
file each time you start EtherPad Lite.
Please see:
https://github.com/raisch/sandbox/blob/master/EtherPadLite-CloudFoundry/buildConfigFile.js
for instructions on how to update your EtherPad Lite.
Please note that as I do not have an account at Cloud Foundry, I cannot test this in place. However, assuming that the process environment contains the values you reference in your example, this will create a valid settings.json
file every time you start your EtherPad Lite instance.