Upstart env stanza not setting environment variables (like NODE_ENV) for Node.js application

Question

I have an Upstart script for my server that looks like this:

description "myapp node.js server"

start on runlevel [2345]
stop on shutdown

env NODE_ENV=production
env CUSTOM=somevalue
exec sudo -u nodejs /usr/local/bin/node /opt/myapp/app.js >> /var/log/nodejs/myapp.log 2>&1

post-start script
    NODE_PID=`status myapp | egrep -oi '([0-9]+)$' | head -n1` 
    echo $NODE_PID > /var/run/nodejs/myapp.pid
end script

However, the app doesn't see NODE_ENV set to production. In fact, if I console.log(process.env) within the app, I don't see NODE_ENV or CUSTOM. Any ideas what's happening?

By the way, NODE_ENV=production node app.js works just fine.