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Gather the ingredients. Preheat oven to 350 F. Butter a 2 1/2 to 3-quart baking dish with butter. Split the biscuits and butter them lightly with the remaining butter. Line the bottom of the prepared baking dish with the split biscuits, cut-side up. Place a large skillet over medium heat. Add the sausage and onions to the skillet and cook, breaking up the sausage as it browns. Add the chile peppers and seasonings to the sausage mixture. Sprinkle the sausage mixture evenly over the split biscuit layer and then top with the shredded cheese. In a large bowl, whisk together the eggs and milk, adding the salt and pepper. Pour egg mixture over the biscuits and sausage. Bake in the preheated oven for about 25 to 30 minutes, until set. A knife should come out clean when inserted into the center of the breakfast casserole. Enjoy hot!