Requiring receiver vendors to represent to buyers that their equipment is fit for purpose is a way to avoid cheap receivers from reducing the performance of coexisting systems in the “decoupled receiver” case, i.e. when there isn't a license holder to negotiate with.
Ensuring adequate receiver performance using protection limits
The starting point for any receiver regulation is an interference protection limit that establishes a ceiling on the interference from other systems (co-channel and out-of-band, though the hard problem is out-of-band) that a system operator has to cope with. It defines the radio signal environment rather than tackling the immensely more complex regulatory challenge of specifying receiver performance.
A protection limit sets the entitlement point around which disputes are resolved. For example, if interference is above the limit, there's an objectively verifiable claim of harmful interference. It also facilitates negotiation: the receiver operator can pay other systems to reduce their delivered energy if it wants to build cheaper receivers; or the receiver operator can be paid by a neighbor (and they could use the money to improve their front-end filters, say) if the neighbor wants to increase their filters. (See "Receiver protection limits: a better way to manage interference than receiver standards" and follow-on posts list there for details.)
Licenses are tied to transmitters. When a licensee controls the receivers in their system, the licensee is the one who is able to make claims of harmful interference, and who can negotiate with neighbors about increased or reduced interference. The licensee has the means and incentive to tailor the performance of their receivers.
The decoupled receiver problem
However, this isn't possible in the decoupled receiver case where receivers are not controlled by a license holder. Anybody can put a lousy GPS or TV set into the market, say, and there's no effective way to hold the manufacturer accountable. An end user who suffers interference, even though the energy from neighboring systems is below the protection limit, can only complain to Congress, with all the messiness that entails (cf. the notorious “garage door opener” case).
Now, given a protection limit, the FCC could theoretically devise a receiver standard and impose it on all manufacturers – but as I’ve argued, that's not only bad policy, it's also a non-starter practically speaking. So what else can one do?
I’ve proposed accrediting a limited number of entities, the holders of the right to protection against interference, who can then authorize any number of manufacturers to put products into the market (see my blog post "Stamps and stampholders: a third way to regulate radio operation"). However, this solution may draw objections from those who cannot countenance any restriction whatsoever on the number of players in the market for receivers (even though it would not limit the number of potential manufacturers).
The “vendor representation” solution
The subject of this post is a third possibility: The FCC sets protection limits, and then requires vendors to warrant to customers that their equipment is fit for purpose, given that the interference environment as defined by the receiver protection limit, and the intended use of the device.
It’s up to the vendor to define the purpose of their device and decide the performance level that will be sufficient. The vendor determines how to respond to the protection limit. This keeps the FCC out of the impossible business of defining and updating receiver performance standards.
Enforcement would happen through trade law, i.e. customers, the FCC or FTC could bring a deceptive advertising case if a receiver was so poor that it could serve its purpose even for signal strength below the protection limit. Enforcement would be against the company selling the device, not the (perhaps off-shore) manufacturer. If and when such a case arose, a tribunal (e.g. the FTC) would have to consider receiver performance requirements, but it would be in a particular, well-defined context. The FCC wouldn’t be defining receiver standards speculatively, trying to cover all possible eventualities.
To see how this helps, imagine that (a) the FCC decides that a certain field strength ceiling in the Lower 10 MHz (1526-1536 MHz) would protect GPS receivers tuned to 1575.42 MHz from harmful interference by LightSquared, and (b) a user buys a GPS device that fails when LightSquared starts operating in their vicinity. With current standard low Q filter, a consumer navigation device would work fine, and the user won't suffer service degradation. However, if someone tried to sell a precision surveying system using only a low Q filter, it would fail. Therefore, if a vendor wanted to sell a satnav system and claim that it allowed highly precise location determination, it would have to use a high Q filter, or ensure adequate precision in some other way. In this way, the representation ensures that receivers are designed to the required quality, but keeps the FCC out of the business of defining standards that are either unnecessarily strict (e.g. a single standard for all GPS receivers), or parsing devices into pretty arbitrary categories and defining different receiver standards for each (e.g. consumer navigation vs. high precision surveying).