A coarse-grained stochastic hydrodynamical description of velocity and conc
entration fluctuations in steadily sedimenting suspensions is constructed a
nd analyzed using self-consistent and renormalization-group methods. We fin
d a nonequilibrium phase transition from an "unscreened" phase in which we
recover the Caflisch-Luke [Phys. Fluids 28, 759 (1985)] divergence of the v
elocity variance to a "screened" phase where the fluctuations have a finite
correlation length depending on the volume fraction phi as phi(-1/3), in a
greement with Segre et al. [Phys. Rev. Lett. 79, 2574 (1997)] (if their obs
ervation of a phi-independent diffusivity is used), and the velocity varian
ce is independent of system size.