Contrary to the SEC's position, rational basis review does not apply to the challenged disclosure because it is not simply factual and uncontroversial information. According to the court, a statement about whether a product is DRC "conflict free" is not clearly a factual, non-ideological statement. Minerals and products cannot themselves engage in conflict. Therefore, a statement about a mineral or product being "conflict free" is a metaphor. The metaphor conveys a moral judgment that the use of conflict minerals, the proceeds of which directly or indirectly flowed to armed groups, is tantamount to having some responsibility for atrocities carried out by those groups. A company might simultaneously disagree with the message this metaphor conveys and condemn the behavior of the armed groups. The court also distinguished conflict minerals disclosure from other disclosures under the securities laws. Unlike other required disclosures, conflict minerals disclosure is not intended primarily to prevent misleading speech or consumer deception, and the "conflict free" label is not being used by companies to sell securities.

The rule does not survive scrutiny under the intermediate standard of review set forth in Central Hudson Gas & Electric Corp. v. Public Service Commission (447 U.S. 557 (1980)). Among other things, the SEC did not present evidence that a less restrictive regulation would fail to achieve Section 13(p)'s goals. The court described possible alternative means to accomplish these goals, including allowing companies to use their own words to describe the status of their products. Because it concluded the rule could not survive intermediate scrutiny, the court declined to hold whether strict scrutiny was in fact the appropriate standard of review.

Did not act arbitrarily and capriciously by choosing not to include a de minimis exception to the conflict minerals reporting requirement. Instead, the SEC acted reasonably when it decided including such an exception could thwart the goal of Section 13(p).

Acted within its delegated authority when it chose to require companies to conduct detailed due diligence even if, after a reasonable inquiry into the country of origin of their conflict minerals, they simply have reason to believe the minerals may have originated in the DRC. Disagreeing with the business groups' contention that the SEC acted arbitrarily in establishing this standard, the court noted the standard was designed to prevent companies from ignoring red flags in their initial country of origin inquiry.

Acted within its delegated authority when it chose to require reporting by companies that both manufacture products and merely contract to manufacture products. The court found that Section 13(p)'s ambiguous statutory language on the coverage of contract manufacturers indicates that Congress determined to leave the question to agency discretion.

Did not act arbitrarily when it set the temporary reporting phase-in period at two years for larger companies and four years for smaller companies. The court reasoned that the SEC could have reasonably concluded that because larger companies have more resources and greater market leverage over their supply chains, they can more quickly collect the information necessary for conflict minerals diligence.

Adequately analyzed the costs and benefits of the conflict minerals rule. The court held that the SEC was not required to conduct a rigorous, quantitative analysis of the humanitarian benefits of the rule. It also reasoned that it would not have been possible for the SEC to weigh these humanitarian benefits (for example, lives saved) against monetary costs to companies, as these two items are not comparable. The court also held that the SEC was not required to question the basic premise of Section 13(p), namely, that a disclosure regime would promote stability in the DRC. The court noted that Section 13(p) required the SEC rulemaking in any event.