diff --git a/testplan/common/report/base.py b/testplan/common/report/base.py
index b570b7415..24bf2d9e1 100644
--- a/testplan/common/report/base.py
+++ b/testplan/common/report/base.py
@@ -70,6 +70,7 @@ def __exit__(self, exc_type, exc_value, tb):
                     str(exc_value),
                 )
                 self.report.status_override = Status.SKIPPED
+                return True
             elif issubclass(exc_type, self.exception_classes):
                 # Custom exception message with extra args
                 exc_msg = "".join(
@@ -79,7 +80,7 @@ def __exit__(self, exc_type, exc_value, tb):
 
                 if self.fail:
                     self.report.status_override = Status.ERROR
-            return True
+                return True
 
 
 @total_ordering
diff --git a/testplan/testing/base.py b/testplan/testing/base.py
index 8642d98d0..36281b868 100644
--- a/testplan/testing/base.py
+++ b/testplan/testing/base.py
@@ -416,36 +416,33 @@ def propagate_tag_indices(self) -> None:
             self.report.propagate_tag_indices()
 
     def _init_context(self) -> None:
-        with self.resources.set_self_exception():
-            if callable(self.cfg.initial_context):
-                self.resources._initial_context = self.cfg.initial_context()
-            else:
-                self.resources._initial_context = self.cfg.initial_context
+        if callable(self.cfg.initial_context):
+            self.resources._initial_context = self.cfg.initial_context()
+        else:
+            self.resources._initial_context = self.cfg.initial_context
 
     def _build_environment(self) -> None:
         # build environment only once in interactive mode
         if self._env_built:
             return
 
-        with self.resources.set_self_exception():
-            if callable(self.cfg.environment):
-                drivers = self.cfg.environment()
-            else:
-                drivers = self.cfg.environment
-            for driver in drivers:
-                driver.parent = self
-                driver.cfg.parent = self.cfg
-                self.resources.add(driver)
+        if callable(self.cfg.environment):
+            drivers = self.cfg.environment()
+        else:
+            drivers = self.cfg.environment
+        for driver in drivers:
+            driver.parent = self
+            driver.cfg.parent = self.cfg
+            self.resources.add(driver)
 
         self._env_built = True
 
     def _set_dependencies(self) -> None:
-        with self.resources.set_self_exception():
-            if callable(self.cfg.dependencies):
-                deps = parse_dependency(self.cfg.dependencies())
-            else:
-                deps = self.cfg.dependencies
-            self.resources.set_dependency(deps)
+        if callable(self.cfg.dependencies):
+            deps = parse_dependency(self.cfg.dependencies())
+        else:
+            deps = self.cfg.dependencies
+        self.resources.set_dependency(deps)
 
     def _start_resource(self) -> None:
         if len(self.resources) == 0:
diff --git a/testplan/testing/environment/base.py b/testplan/testing/environment/base.py
index a53487dcc..5c787c69f 100644
--- a/testplan/testing/environment/base.py
+++ b/testplan/testing/environment/base.py
@@ -55,19 +55,10 @@ class TestEnvironment(Environment):
     def __init__(self, parent: Optional["Test"] = None):
         super().__init__(parent)
 
-        self.__dict__["self_exception"] = None  # Optional[Exception]
         self.__dict__["_orig_dependency"] = None  # Optional[DriverDepGraph]
         self.__dict__["_rt_dependency"] = None  # Optional[DriverDepGraph]
         self.__dict__["_pocketwatches"] = {}  # Dict[str, DriverPocketwatch]
 
-    @contextmanager
-    def set_self_exception(self):
-        try:
-            yield
-        except Exception as e:
-            self.self_exception = e
-            raise
-
     def set_dependency(self, dependency: Optional[DriverDepGraph]):
         if dependency is None:
             return
diff --git a/testplan/testing/multitest/base.py b/testplan/testing/multitest/base.py
index e8ed7f586..d418b6bbd 100644
--- a/testplan/testing/multitest/base.py
+++ b/testplan/testing/multitest/base.py
@@ -592,8 +592,13 @@ def skip_step(self, step) -> bool:
                 or self.resources.stop_exceptions
                 or self._get_error_logs()
             )
-        elif self.resources.self_exception is not None:
-            # self of status ERROR
+        elif "_start_resource" not in self.result.step_results and any(
+            map(
+                lambda x: isinstance(x, Exception),
+                self.result.step_results.values(),
+            )
+        ):
+            # exc before _start_resource
             return True
         elif step in (
             self._start_resource,
diff --git a/tests/unit/testplan/common/report/test_base.py b/tests/unit/testplan/common/report/test_base.py
index c13c7bf1d..cda4f2ea9 100644
--- a/tests/unit/testplan/common/report/test_base.py
+++ b/tests/unit/testplan/common/report/test_base.py
@@ -37,7 +37,7 @@ def test_exception_logger_suppression():
 @disable_log_propagation(LOGGER)
 def test_exception_logger_reraise():
     """
-    ExceptionLoggerBase should raise the exception without logging
+    ExceptionLogger.* should raise the exception without logging
     if it doesn't match `exception_classes`.
     """
     rep = DummyReport()
@@ -50,6 +50,16 @@ def test_exception_logger_reraise():
         with rep.logged_exceptions(IndexError):
             raise KeyError("bar")  # raised
 
+    rep = DummyReportGroup()
+
+    with pytest.raises(KeyError):
+
+        with rep.logged_exceptions(IndexError):
+            raise IndexError("foo")  # suppressed
+
+        with rep.logged_exceptions(IndexError):
+            raise KeyError("bar")  # raised
+
 
 class TestReport:
     def test_equality(self):