The U.S. Justice Department has been seeking an agreement requiring Arpaio's office to train officers in how to make constitutional traffic stops, collect data on people arrested in traffic stops and reach out to Latinos to assure them that the department is there to also protect them.
Arpaio has denied the racial profiling allegations and has claimed that allowing a court monitor would mean that every policy decision would have to be cleared through an observer and would nullify his authority.
DOJ officials told a lawyer for Arpaio on April 3 that the lawman's refusal of a court-appointed monitor was a deal-breaker that would end settlement negotiations and result in a federal lawsuit.
The "notice of intent to file civil action" came Wednesday from Assistant U.S. Attorney General Thomas Perez in a letter to an Arpaio lawyer.
Perez, who heads the DOJ's civil rights division, noted that it's been more than 100 days since the sheriff's office received the DOJ's findings report and federal authorities haven't met with the Maricopa County Sheriff's Office counsel since Feb. 6 to discuss the terms of a consent agreement.
Neither Arpaio nor Joseph Popolizio, one of the lawyers representing the sheriff's office, immediately returned calls seeking comment.
Last December, the DOJ released a scathing report accusing Arpaio's office of racially profiling Latinos, basing immigration enforcement on racially charged citizen complaints and punishing Hispanic jail inmates for speaking Spanish in Arizona's most populous county.
The DOJ also accused Arpaio of having a culture of disregard for basic constitutional rights.
The civil rights allegations have led some Arpaio critics to call for his resignation, including the National Council of La Raza, a prominent advocacy group for Latinos.
The sheriff's office also is facing criticism over more than 400 sex-crimes investigations — including dozens of alleged child molestations — that hadn't been investigated adequately or weren't examined at all over a three-year period ending in 2007.
Arpaio has apologized for the botched cases, reopened 432 sex-crimes investigations and made 19 arrests.
Separate from the civil rights probe, a federal grand jury has been investigating Arpaio's office on criminal abuse-of-power allegations since at least December 2009. That grand jury is examining the investigative work of the sheriff's anti-public corruption squad.
The self-proclaimed toughest sheriff in America has been a national political fixture who has built his reputation on jailing inmates in tents and dressing them in pink underwear, selling himself to voters as unceasingly tough on crime and pushing the bounds of how far local police can go to confront illegal immigration.