The legal theory under which states were able to reject federal laws deemed unconstitutional was known as

naturalization.

nullification

resolution.

sedition.

Nullification.

Explanation:

The legal theory of nullification established that states could annul or not apply laws coming from the federal government, provided that they considered them as unconstitutional and that those laws affected the rights of the state and/or its citizens.

This theory had its origin in the confederate beginnings of the United States as a nation, in which each state retained its sovereignty and decisions were taken jointly but without depending on a strong and dominant federal government. In this context, the states could decide not to apply the laws that the Congress of the Confederation would sanction if they were contrary to states' objectives, given that they had the necessary sovereignty to do so.

With the change in the political organization of the United States after the enacting of the Constitution of the United States, going from being a confederation to a federation with a sovereign federal state, the states technically ceded this power of nullification. The problem was that this was not explicitly established in the Constitution, therefore causing great controversies such as the Nullification Crisis of 1832.