The FAA said Southwest operated nearly 60,000 flights using 46 planes that had not been inspected for possible fatigue-related cracking on the fuselage areas.
The airline flew another 1,451 flights with the same planes in March 2007, even after discovering that it had failed to conduct the required inspections, the FAA charged.
The agency had ordered airlines in September 2004 to conduct the inspections on some older models of Boeing 737 aircraft.
"The FAA is taking action against Southwest Airlines for a failing to follow rules that are designed to protect passengers and crew," said Nicholas A. Sabatini, the agency's associate administrator for safety. "We expect the airline industry to fully comply with all FAA directives and take corrective action."
The airline said Thursday it had complied with regulators' requests and would contest any fine. The airline has 30 days to respond to the FAA.
The aim of the FAA's 2004 directive was to make sure airline crews found and repaired small cracks before they became large enough to pose a safety hazard.
A spokeswoman for Southwest, Beth Harbin, said the airline brought the issue to the FAA's attention and believed it had handled the matter to the agency's satisfaction. Harbin said the airline believed the case was closed last year.
"We brought in 46 airplanes to take another look at them," Harbin said. "These are preventive inspections. On six of the 46 we found the start of some very small cracking. That's the intent of the inspection schedule to find something before it becomes a problem. These are safe planes."
A congressional committee is looking into why the FAA didn't ground the planes when it learned of the missed inspections a year ago.
FAA regulations require that airplanes be grounded if a mandatory inspection has been missed, until the work can be performed.
The FAA could have sought a penalty of $25,000 per violation, or up to $36 million, according to a person close to the situation and who spoke on condition of anonymity. The person said the higher fines were unlikely partly because the agency must consider the company's ability to pay in setting a penalty.
Airlines are under heavy financial pressure because of high fuel costs.
The largest civil penalty the FAA has ever imposed was $10 million, and the largest against an airline was $9.5 million about two decades ago against Eastern Airlines.