Preheat the oven to 350 degrees F (175 degrees C). Spray a 9x13-inch baking dish with cooking spray.

Cook and stir sausage in a hot skillet over medium heat until crumbly and no longer pink, 5 to 7 minutes. Drain and discard grease, and transfer sausage to a bowl.

Cook hash browns in the skillet in the residual grease over medium heat, stirring occasionally, until lightly browned, about 8 minutes. Remove from the heat.

Transfer hash browns to the prepared baking dish and spread in an even layer across the bottom. Sprinkle cooked sausage over top, then layer with Cheddar cheese and chile peppers.

Whisk milk, eggs, salt, pepper, onion powder, and garlic powder together in a bowl. Pour over hash brown mixture.

Bake casserole, uncovered, in the preheated oven until bubbly and the top is golden brown, 35 to 40 minutes.