Preheat oven to 350°F. Spray a 9x13-inch baking dish generously with cooking spray.
In a large skillet over medium-high heat, cook the breakfast sausage until browned and crumbled, about 8-10 minutes. Add diced onion and bell pepper in the last 3 minutes. Drain excess grease and set aside.
Spread thawed hashbrowns evenly in the bottom of the prepared baking dish.
Layer the cooked sausage mixture over the hashbrowns, then sprinkle with 2 cups of shredded cheddar cheese.
In a large bowl, whisk together eggs, milk, sour cream, garlic powder, salt, and pepper until well combined.
Pour the egg mixture evenly over the casserole, making sure it seeps down into all the layers.
Top with the remaining 1 cup of shredded cheese.
Bake uncovered for 40-45 minutes until the eggs are set in the center and the top is golden brown. A knife inserted in the center should come out clean.
Let stand for 5-10 minutes before cutting into squares and serving. Garnish with fresh chives or green onions if desired.