Thanks are due to Richard Bridge, who told me to use the word 'derivative' when searching copyright law to learn about musical arrangements.

If you go to copyright.gov, you can download a PDF of U.S. copyright law. Then search [CtrlF]for 'derivative'. You will learn that a musical arrangement of an existing piece is a derivative. Later you will find this:

"The copyright in a compilation or derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material.

The copyright in such work [the new arrangement] is independent of, and does not affect or enlarge the scope, duration, ownership, or subsistence of, any copyright protection in the preexisting material."

So if, for example, the Carters recorded "Wildwood Flower", a song from the 1880's, and if the Carters did an accompaniment where somebody ran up and down the bass strings in harmony while somebody else did triplets in the treble, then the Carters can copyright that accompaniment. But they cannot claim a copyright on "Wildwood Flower" itself, either the melody or the lyrics.

Meanwhile, we all know what folkies are like. Give a folkie a song, some chord symbols, and a guitar and every person will quickly produce a new accompaniment for the tune. Fingers will fly over the keyboard, and if you asked at the end what was played for a given measure, they couldn't tell. (I play the same way myself.) Trying to copyright playing of this nature is like trying to map a swarm of bees.

Joe, there are penalties for violating a legit copyright, but there are no penalties for claiming a copyright to which one is not entitled. It doesn't surprise me that Hal Leonard is throwing their weight around.