They pour something in this merky mess and all the sludge falls to the bottom. Any ideas what that is?

I haven't seen it, but it sounds like a flocculant, perhaps combined with some other form of treatment.

River runners have often used alum (potassium aluminum sulfate, available as a pickling spice) to settle turbid river water, and then treat the clearer water by some other means.

(As I get ready to click the submit button, I can only keep my fingers crossed that the word "flocculant" will slip past the foul language filter <img src="/forums/images/graemlins/wink.gif" alt="" /> ).