General Motors Corp.'s X-car began as a grand American automotive achievement. GM's first front-wheel-drive car came off the production lines in January, 1979, just as the American auto industry was hitting the skids.

In that first year, GM sold 1.1 million X-model compacts. Although none of the buyers knew it, many thousands of those models were built with faulty brakes that could lock during moderate-to-hard stops, throwing the cars out of control, according to the National Highway Traffic Safety Administration.

Now, the 1980 X-car is the target of an unprecedented $4 million suit brought by the Justice Department at NHTSA's request early last month. The suit's most serious charge is that the auto maker lied in an effort to hide the extent of X-car braking problems. The government is seeking to force GM to recall all 1.1 million 1980 X-cars for repairs to correct alleged brake system defects.

The suit is the last thing the nation's No. 1 auto maker expected from the Reagan administration, which took over NHTSA in 1981 with a pledge to help revive the American auto industry by lifting some of the heaviest NHTSA regulations off its back. Privately, some GM officials say they were double-crossed. Publicly, company spokesmen deny the charges. The record will show that GM "acted in good faith," said Elmer Johnson, GM's general counsel and vice president for public relations.

The X-car case also is about another kind of defect--a breakdown of a regulatory system intended to identify and correct potential auto safety hazards as rapidly as possible, to minimize the public risk.

The history of the case, a four-year correspondence between NHTSA, GM and angered X-car owners, is detailed in hundreds of memos, notes of telephone conversations, minutes of meetings, corporate and government notices, reports and studies, letters and congressional correspondence. This record portrays a timid, bumbling bureaucracy--unable or unwilling to get to the bottom of the X-car safety issue until years after the first complaints surfaced.

The record also contains 2,342 complaints by X-car owners, as of mid-August, including 72 allegations of X-car accidents stemming from faulty brakes. Seventeen people died in the accidents, the complaints say.

The braking problems were the result of a new design for front-wheel-drive cars--which, with the engine and drive-wheel assembly up front, are front-heavy. The weight in traditional rear-wheel-drive cars, by comparison, is more evenly distributed, because the drive-wheel assembly, with its heavy front-to-rear drive shaft, acts as a counterbalance to the engine weight up front.

Front-wheel-drive cars, as a result, require more front braking pressure and much less braking force in the rear. Rear-wheel-drive cars also take most braking pressure up front, because of engine weight. But the back-braking force in rear-wheel-drive cars is greater than that in front-wheel-drive models because of the weight of the rear-drive assembly.

GM's designers and engineers had to take those differences into account in distributing hydraulic pressure between the X-cars' front and rear brakes. The records show that, at least in the beginning, they didn't get it right.

The initial X-car braking arrangement used a proportioning valve that gave the rear brakes 41 percent of any braking pressure over 350 pounds per square inch. Full stopping pressure, the maximum allowable by the braking system's master cylinder, goes only to front brakes in front-wheel-drive cars.

GM knew before the X-car went into production that the 41 percent proportioning valve might allow too much rear braking pressure, according to the records. And the records show that GM began shifting to a 27 percent proportioning valve in June, 1979, six months after X-car production began. The lighter rear-brake pressure had the effect of reducing the risk of brake lock--and skids.

In May, 1979, while the X-car was still in production, GM also began shifting to a "nonaggressive" rear-brake lining on certain models, substituting brake pads that applied less friction during stops in place of the original "aggressive" brake pads.

Thousands of GM dealers knew about the early brake changes, because GM told them in "service information bulletins." But NHTSA didn't find out about the changes in proportioning valves until June, 1980, according to NHTSA files. According to a General Accounting Office report on the X-car case, the NHTSA engineer in charge of the X-car probe did not become aware of the change to "nonaggressive" brakes until April, 1981.

NHTSA began an engineering analysis of the X-car brakes in November, 1979, after the agency had received its first consumer complaints. But during the next 13 months, the agency sent only two inquiries to GM about the brakes, despite the relatively small but steady increase in consumer complaints and the considerable attention given to X-car braking problems in auto trade magazines.

In its initial responses, GM said the braking changes were designed to meet customers' preferences for the way the cars handled rather than to cure a hazardous design problem.

In June, 1981, NHTSA officials--citing the increasing number of complaints--privately urged GM officials to recall some of the 1980 lines voluntarily. Two months later, GM agreed. Without admitting a safety problem, it issued a voluntary recall of 47,371 X-cars to change the proportioning valve.

Not until after that August, 1981, recall did NHTSA order specific tests of the braking problems. Based on these tests, NHTSA engineers reached a preliminary conclusion in November, 1981, that "the greatest contributor" to the X-car braking problem was "aggressive" brakes, not the proportioning valve. This implied the possible need to recall many thousands of additional X-cars built prior to May, 1979, when GM switched to "nonaggressive" brakes.

A formal NHTSA poll of the 47,371 X-car owners to determine whether the proportioning valve "fix" had cured the problem was delayed by NHTSA for seven months, and then was botched, with 30,761 letters going to incorrect addresses.

Last January, NHTSA notified GM that "all manual transmission X-body vehicles and all automatic transmission X-body vehicles built before May 1, 1979, . . . are subject to failures in performance which can result in accidents, injuries, death or property damage." The limited August, 1981, recall had not corrected the problem, NHTSA added.

A month later, in February, GM said it would recall 240,000 X-cars to check for possible brake defects. By then, NHTSA was under sharp attack from Congress for delays in the X-car probe.

On Aug. 3, two days before the release of a draft Government Accounting Office probe criticizing NHTSA's X-car actions, the agency filed suit against GM, seeking damages and demanding full recall of the 1.1 million 1980 model X-cars.

What happened at NHTSA? Consumer activist Joan Claybrook, who is a former NHTSA administrator, accuses the agency of playing politics, of acting in extremis in carrying out President Reagan's vow to take government off the back of American business.

"The Reagan administration came in with what it called a mandate to deregulate, to get rid of regulatory costs," Claybrook said. "The Reaganauts thought they could help Detroit by getting rid of costly regulation. But they forgot to pay attention to the benefits side."

Not so, says Ray Peck, whose controversial tenure as NHTSA administrator under Reagan ended when he resigned April 22.

Peck conceded in an interview that NHTSA's investigation was hampered by a "totally unexplainable delay," the initial 13 months of relative inactivity in the case. But he said allegations that NHTSA held up the case for political reasons are "unmitigated rubbish."

And GM defends its conduct in the case as proper, denying it tried to mislead the government. GM's technical people "did have early knowledge of non-safety problems affecting the brakes," said GM's Johnson. "With any new car, during the pre-production, and even the post-production phase, the technical people will have problems.

"They were concerned about the durability of the brakes," Johnson said. The company began replacing 1980 X-car brake components in the early stages because "the non-safety problem raised consumer concerns, which we were trying to allay," he said.

GM's recall actions were taken "to preclude the possibility of prolonged and costly litigation," the company said in a July, 1981, response to NHTSA.

Current NHTSA officials declined comment. But Peck said he believes the decision to take GM to court "came as a last resort, because the agency has reason to believe that GM knew that its initial X-car brake recall was inadequate."

The problem is that NHTSA was acting from a disadvantage, playing David against Goliath without benefit of a sling, Peck said. The company's ability to continue a case often exceeded the government's ability to pursue the matter. And, the 1966 law that established NHTSA benefited GM as much, if not more, than it did the government's enforcement efforts, Peck said.

"At every significant stage of the investigation, the company responded to everything the agency did. Every time the agency was ready to go forward, GM, in effect, trumped what we were going to do. GM always put us in a position where we had to prove that what they were doing was not right," Peck said.

For example, he said the 1966 law does not give NHTSA the absolute right to prescribe remedies for a defect. The auto maker has the first right to remedy. If the remedy is inadequate, NHTSA then has the right to specify a fix--but only after it has proved that the first remedy was inadequate or that the auto maker had reason to believe that the initial fix would be inadequate.

NHTSA's authority to issue a recall order is limited to final findings of defect. Such findings and orders, of which there have been eight in the history of the agency, usually involve lengthy litigation.

As a result, "An involuntary recall is an unsuccessful recall," Peck said. "The litigation could last a long time, all the while leaving dangerous cars on the road . . . . In every defects case, you have to balance between getting the company to agree and getting the cars off the road, or pushing the company into court and leaving the cars on the road until the case is settled," Peck said.

Now, four years and nine months after the first X-cars were built, NHTSA's efforts have produced the worst of both worlds, by Peck's reasoning--years of private, closed-door bargaining with GM out of public view, and, potentially, years more while the last chapter is thrashed out in the courts.