WASHINGTON, May 14 (Reuters) - The U.S. Justice Department said late on Tuesday that Boeing Co had breached its obligations in a 2021 agreement that shielded the planemaker from criminal prosecution over fatal 737 MAX crashes in 2018 and 2019 that killed 346 people.

The Justice Department said in a court filing in Texas that Boeing had failed to "design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws throughout its operations." The Justice Department said Boeing is subject to prosecution, but the government is determining how it will proceed in this matter.

Boeing did not immediately respond to a request for comment.

The Justice Department declined to comment beyond the court filing, which contained a letter in which it said it told Boeing to explain the nature and circumstances of the breach and actions to address the situation by June 13, which the government shall consider in determining whether to pursue prosecution of Boeing. The department will decide by July 7 about how it will proceed.

Relatives of people killed in the crashes and their lawyers had argued that the U.S. planemaker violated a 2021 deal with prosecutors to overhaul its compliance program. Federal prosecutors had previously agreed to ask a judge to dismiss a criminal charge against Boeing so long as it complied with the deal's terms over a three-year period.

But a panel blew off a new Boeing 737 MAX 9 jet during a Jan. 5 Alaska Airlines flight, just two days before the 2021 agreement expired. Justice Department (DOJ) officials are now weighing that incident as part of a broader probe into whether Boeing violated the deal, known as a deferred prosecution agreement, or DPA.

In January 2021, Boeing agreed to pay $2.5 billion to resolve a criminal investigation into the company's conduct surrounding the crashes. The U.S. planemaker agreed to compensate victims' relatives and overhaul its compliance practices as part of the deal with prosecutors.

The agreement gives U.S. officials six months from the deal's Jan. 7 expiration to decide whether to prosecute Boeing on a charge that the company conspired to defraud the Federal Aviation Administration or pursue other alternatives to dismissing the case.

Paul G. Cassell, a lawyer for the families, said the DOJ announcement was a "positive first step ...But we need to see further action from DOJ to hold Boeing accountable." He said the families will use a meeting with DOJ on May 31 to describe in detail "what we believe would be a satisfactory remedy to Boeing’s ongoing criminal conduct.” (Reporting by David Shepardson; Editing by Leslie Adler and David Gregorio)