The Trump administration on Wednesday eased rules for handling toxic coal ash from more than 400 US coal-fired power plants after utilities pushed back against regulations adopted under Barack Obama.

The Environmental Protection Agency (EPA) acting administrator, Andrew Wheeler, said the changes would save utilities roughly $30m annually.

The move represents the latest action by Donald Trump’s EPA to boost the struggling coal industry by rolling back environmental and public health protections enacted under his predecessor.

It pushes back the deadline to close problematic ash dumps and gives state regulators flexibility in how they deal with the vast waste piles that result from burning coal for electricity.

Environmentalists argued the administration was endangering the health of people living near power plants and ash storage sites, while industry representatives welcomed the announcement.

US coal plants produce about 100m tons annually of ash and other waste, much of which ends up in unlined disposal ponds prone to leak. Some have been in use for decades.

Data released by utilities in March under an EPA mandate showed widespread evidence of groundwater contamination at coal plants. Heightened levels of pollutants, including arsenic and radium in some cases, were documented at plants in numerous states, from Virginia to Alaska.

EPA documents show most savings for utilities from the new rules will come from extending by 18 months the deadline to close ash dumps that don’t meet water protection standards. The new deadline is 31 October 2020.

The utility industry said the change provided “regulatory certainty” for ash dump operators. That’s in part because it aligns the closure requirements with forthcoming guidelines limiting the levels of toxic metals in wastewater discharged from power plants.

The changes also give state regulators the power to suspend monitoring requirements for dumps that don’t meet water quality standards.

“It’s not like EPA has granted us a free pass here. It just gives us additional time to operate those facilities and better synch them up” with the coming wastewater guidelines, said James Roewer, executive director of the Utility Solid Waste Advisory Group, an industry organization that had pushed for the changes.

The original, Obama-era rule, adopted in 2015, came in response to a huge 2008 coal ash spill in Kingston, Tennessee. A containment dike burst at a Tennessee Valley Authority power plant and released 5.4m cubic yards of ash.

The accident dumped waste into two nearby rivers, destroyed homes and brought national attention to the issue.

The attorney Larissa Liebmann, with the Waterkeeper Alliance, said the costs saved by utilities would not simply go away. Instead, she said, they would be borne by communities that are forced to deal with contaminated water.

“We think it’s fundamentally unfair,” Liebmann said. “The rules that were created in 2015 were already very much to the bare minimum.”

