Toyota Motor Corp faces a proposed $16.4 million fine from U.S. regulators, the maximum penalty allowed under current laws, after the automaker failed to notify the government in a timely way about accelerator pedal flaws that were the subject of a massive recall in January.

The U.S. Transportation Department said on Monday that safety regulators were still determining whether Toyota had additional violations that would warrant more penalties.

We now have proof that Toyota failed to live up to its legal obligations, U.S. Transportation Secretary Ray LaHood said in a statement. Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.

The penalty by the Department's National Highway Traffic Safety Administration would be the largest fine ever levied against an auto manufacturer by the government.

Toyota has the right to appeal the penalty.

The previous largest fine was $1 million against General Motors because of a windshield wiper failure in 2002-2003 model vehicles.

Toyota did not address the proposed fine specifically in a statement on Monday afternoon, but did say it had already taken a number of important steps to improve communications with regulators and customers over safety matters.

Documents obtained from Toyota showed the automaker had issued repair notices in Canada and Europe to address complaints about sticky accelerator pedals, sudden acceleration and sudden engine revving in late September, but did not begin a U.S. recall until late January, the department said.

Auto manufacturers are legally obligated to notify U.S. safety regulators within five business days if they determine that a safety defect exists and the documents showed that Toyota was aware U.S. consumers were experiencing the same problems, the department said.

Toyota announced in late January that it would recall about 2.3 million vehicles in the United States because of sticky accelerator pedals. The automaker has offered to fix the pedals by adding a metal shim, or to replace them completely.

The recall related to the sticky accelerator pedals was one of a handful of recalls to plague Toyota in recent months and mar the automaker's reputation for vehicle quality.

Every automobile manufacturer should learn from this and err on the side of disclosure and transparency, said Kurt Bardella, spokesman for U.S. Rep. Darrell Issa, the ranking Republican on a House committee that has held hearings on the handling of Toyota safety recalls.

U.S. safety regulators opened a review on February 16 to determine whether Toyota's recalls of millions of vehicles due to potentially dangerous floormats and sticky accelerator pedals were carried out in a timely manner.

(Reporting by John Crawley in Washington and David Bailey, Bernie Woodall and Soyoung Kim in Detroit; Editing by Toni Reinhold, Bernard Orr)

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