Preheat your oven to 350°F (175°C).
In a large pot, cook the white rice according to your preferred method. Once cooked, set it aside to cool slightly.
In a large skillet, melt the butter over medium heat. Add the finely chopped onion and sauté until it becomes translucent, about 5 minutes.
In a large mixing bowl, combine the cooked rice, sautéed onions, drained green chiles, sour cream, cottage cheese, crumbled bay leaf, salt, and pepper. Mix well until all ingredients are fully incorporated.
Pour the rice mixture into a greased 9x13-inch baking dish, spreading it out evenly.
Sprinkle the shredded sharp cheddar cheese evenly over the top of the rice mixture.
Place the baking dish in the preheated oven and bake for about 25-30 minutes, or until the cheese is melted and bubbly.
Once baked, remove the dish from the oven and let it cool for a few minutes. Garnish with chopped fresh parsley if desired. Serve warm and enjoy your delicious Green Chile Rice!