This paper reports on research activities developed during the first year of this project. The main tasks accomplished and reported in this paper are: a) the development of new computational equation of state (EOS) for granite. One-dimensional calculations using this EOS captures the first principles physics of the near source region and identifies the critical material properties for cavity dynamics. Cavity dynamics are an important consideration for methods that are used to determine accurate estimates of yield under varying emplacement conditions; and b) the extension of the newly developed material models to the analysis of scaled depth of burial and free surface effects in a 2D heterogeneous structure. Efforts in this area are focused on a better understanding of the source stress-cage region as well as free surface Rayleigh and shear wave generation. A strong motion code for uniform source region structures was used to investigate the dependence of cavity dynamics and final radius on material properties (Young's modulus, shear modulus, gas porosity, overburden, etc.). The material model developed was obtained by taking the PILEDRIVER and the HARDHAT nuclear test events as the main design references. The following aspects of the problem were identified as the driving points when developing the material model: velocity profiles at given stations (near field), source modeling alternatives (iron pill vs. ideal gas vs. Hydses/SESAME), energy partition after the shot, peak velocity and peak displacement attenuation profiles and cavity size as a function of the depth of burial. Previous attempts made with existing material models failed to comply with one or more of the main aspects of the problem. Because of this, a Tillotson type of equation of state with an improved handling of the porosity evolution (crushing and bulking) was implemented, along with a constant yield surface strength model.