My wife's employer is rounding her timekeeping by quarter hours. I know that it is legal to do so; however, she refuses to explain how she is rounding (up or down). My understanding is that the employer has to be fair and consistent. By looking at my wife's time card it is clear that the employer will round down a quarter hour even if my wife works 8 minutes of the quarter (more than half). Is that legal?

No, the employer can use 15-minute intervals, but it must be the nearest 15-minutes. If the employer is always rounding to their advantage, but never to the employee's advantage when the rule provides for it, then the employee is not being paid for "substantially" all time worked.
http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_785/29CFR785.48.htm

She can file a claim for unpaid wages with the state Dept. of Labor.