The U.S. Department of Transportation dropped its investigation of 1973-'87-model General Motors Corp. full-size pickup trucks because it could not win the court battle the automaker intended to wage, say GM and Washington insiders.

DOT Secretary Federico Pena, who had said the trucks presented an "unreasonable risk" of fire in side collisions, decided to drop the push for a recall when the Justice Department advised him it was a fight he could not win.

A Wall Street Journal account of the negotiations reported that GM had lined up a half-dozen former National Highway Transportation Safety Admin. heads who would say at DOT recall hearings planned for mid-December that Mr. Pena made the wrong decision to pursue the recalls.

The announcement is a huge victory for GM, which loathed the specter of public DOT hearings, but also a victory for all business, says Rep. Bob Carr (D-MI).

"The importance of stopping (this recall) as a precedent was profound," says Rep. Carr, who leaves Congress this month but is said to be atop President Clinton's short list of replacements for Mr. Pena if he vacates (or is vacated) between the Christmas break and mid-January.

To order the recall even though they met all safety standards when they were built, Rep. Carr says, "reduces the future certainty of all regulations and eliminates fair play."

Opponents of the arrangement, which GM says was not its idea and didn't want to appear as a "settlement," say the corporation bought its way out of the pickup truck jam.

In the agreement, GM will pay $51.355 million for safety research in a joint program that will see DOT contribute another $27 million for the research. The agreement came just days after GM filed suits against DOT and Mr. Pena personally.

Although negotiations are ongoing, it is believed GM will pay:

* $8 million to provide child-safety seats for low-income families.

* $11.855 million for education regarding drunk driving and seat belt use.

* $10 million for a fire safety lab.

* $5 million for research into bum and trauma treatment.

* $5 million for computer-based modeling of accident's and injuries.

GM also will work with the government to improve current fuel-system integrity standards. DOT says it wants to develop a standard that "best simulates the real-world crash conditions that result in ... fires."