How penalties on repo fails work? There are a couple of questions I have about imposing penalties on repo fails.

Is the repo fail penalty imposed only on the seller of securities if
it does not buy the securities back or also on the buyer if it does
not return the collateral?
I read that a lack of penalties sets the repo floor at 0%, I don't get why this is so.
In the US, a fail penalty is applied on the failure to deliver securities in a US Treasury or Agency transaction.  This applies to any trade in these securities , including a simple cash trade , or the opening leg of a repo, or the closing leg of a repo.
The intent of the system , first introduced in 2012, was to clean up fails in the Marketplace by providing an incentive to settle.  The convention in the marketplace is that if there is a settlement failure, then further daily attempts to settle are made until the trade clears.  When this happens , the cash amount instructed doesn’t change over time.  Therefore, a counterparty that fails to deliver securities is effectively making a decision to lend money at zero interest.  But in the absence of a fails penalty, this may be logical if interest rates are close to zero and/or the securities are scarce.
In addition, In the absence of a fails penalty, repo cannot trade below zero.  Why?  There’s no point in lending money via repo at a negative rate in order to borrow securities that you have sold short.  It is better economically just to fail on the cash trade.