The XML declaration is part of the serialized XML, it's not normally represented as part of the in-memory data model that your C# program sees, because "encoding" has no meaning there. Look at the class you use to serialize the XML (e.g an XmlTextWriter) and see if there is a method to set the encoding on the output.
Michael Kay
http://www.saxonica.com/
Author, XSLT Programmer's Reference and XPath 2.0 Programmer's Reference