Updated at 5:30 p.m.

Oregon will receive more than $85 million as part of state and federal settlements with Volkswagen, the automaker at the center of emissions fraud lawsuits across the country.

About $68 million will help establish a special fund aimed at reducing diesel emissions in Oregon, Gov. Kate Brown and Attorney General Ellen Rosenblum announced at a news conference Tuesday in Portland.

Volkswagen will pay an additional $17 million to the state for violating consumer protection laws.

"Real money will go into the hands of Oregonians who purchased these falsely marketed vehicles," Rosenblum said. "Real money will go to our state to mitigate some of environmental consequences of these cars on our roads."

Brown said Oregon's share of the settlement will be spent on cycling out older -- and more polluting -- diesel engines. She called diesel exhaust "the No. 1 air quality threat" for many Oregonians.

"Newer, cleaner engines are available and they lower emissions by 90 percent," Brown said. "I plan to use these additional resources to expedite the transition to clean diesel engines."

Sen. Michael Dembrow, D-Portland, said later on Tuesday that the Legislature is working toward solutions for "dirty diesel."

"The funds from this settlement can and should be used to reduce diesel particulate emissions in our state by speeding up the timeline for purchasing newer, cleaner equipment in both the public and private sectors," Dembrow said in a statement.

Some 400 people in Oregon get sick and die annually from disease caused by exposure to diesel exhaust, according to the U.S. Environmental Protection Agency. Areas with minority communities and low-income residents are hit hardest, Brown said, "amplifying existing disparities."

Treating illnesses related to diesel exhaust costs $1.6 billion to $3 billion annually.

"The resources realized under today's agreement greatly expand our ability to improve public health throughout the entire state," Brown said.

In total, Volkswagen will pay more than $15 billion in settlements for cheating on emissions tests. The company programmed their emissions controls to turn on during government tests and switch off once on the road, the Associated Press reported.

An investigation revealed the cars emitted more than 40 times the legal limit of nitrogen oxide, which can result in respiratory issues. Oregon was among six states to head the investigation that led to the settlement.

Though the federal settlement must still win court approval, it says 13,015 Oregonians who leased or owned a faulty Volkswagen will receive at least $5,100. They'll also have a choice between a buyback or a modification to make their vehicle comply with emissions standards.

The buyback would be based on the car's market value before the scandal.

Oregon has the highest per capita ownership of the faulty Volkswagens in the country.

Vehicles covered by the settlement include Volkswagen and Audi 2.0 diesel models from 2009 to 2015 that claimed low emission levels.

"Many Oregonians purchased these vehicles because Volkswagen advertised the cars as legitimate green vehicles," Rosenblum said. "That was not true. These are some of the dirtiest cars on the road."

- Talia Richman

trichman@oregonian.com

@TaliRichman