My husband had to sign a flucuating work week pay system in compliance with 29 CFR 778.114 prior to employment. this basically states that the company does not pay overtime they pay a half-time overtime premium, this means he actually makes half of his hourly salary rather than time and a half for overtime. he generally works at least 60 hrs a week. is this fair and lawful??? thanks...
he is an inspector for refinaries, and works 12 hour shifts is this law relevant?

Whether it is fair or not is subjective. If you want to read the FLSA regulation, here it is and, under the circumstances described in the regulation, it can be legal.
http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_778/29CFR778.114.htm

And please do not refer to it as "Chinese overtime"; it's offensive to many, me specifically. It the "fluctuating workweek" pay method.