I am in the process of contacting potential advisors at various universities, and finding out if they would be willing to take me on as a student, and then mention this in the application. However, I have run into a problem. The area of research I am interested in (desalination & water treatment) typically comes under the Civil and Environmental dept. in the US, and so do the faculty. Where I am from, this topic comes under Chemical Engineering. I have done my bachelors and masters in ChemE and want to do my PhD in it as well. So now I would like to know if I mention that I want to work with professors from these departments in my ChemE PhD application, will it hurt my chances? Do I now have to consider applying to CEE Department instead?
If you have already made contact with some professors, seek their advice on the best way to do things. I think you are likely to find problems, however.
One solution you might suggest is to have more than one advisor, one in each department. This would be more likely to be acceptable to both departments.
The other issue is that if you have TA funding then it would probably come from the department you are formally associated with and they probably would want you to be a formal student in that department.
Good luck, but the best source of information and a solution is the professors you've already contacted.
From my experience (US, biomedical engineering) this is actually quite common. There are many professors whose primary appointment is in a different department than the one you've signed up for. Again, from my experience, this actually tends to be a good thing; you get exposure to a wider range of faculty, students, collaborators, techniques, and ideas.
The specific department through which you're enrolled is mostly going to dictate your required course load, secondary degree-granting requirements (submission/publication counts, qualification exam differences), and possibly some thesis details. (Aside from the obvious "the actual degree you receive".) With respect to the first point—course load—I've found that departments are generally quite willing to work with you on non-core courses so long as its relevant to your work.
So to answer your specific question, so long as the professor is doing vaguely related work to your specific area of interest, I don't think it's likely to hurt your chances significantly. That said, this is something pretty specific to the university, so definitely just reach out and ask... this isn't an uncommon question.