The NFL rejected Carter's appeal, which was made at a lengthy hearing on April 5.
The league said Carter will not be eligible for reinstatement until February, following the 2000 season.
Carter, 30, stands to lose $3.5 million in base salary, and he might also have to reimburse the Broncos a prorated portion of his $7.8 million signing bonus.
Already a two-time offender of the NFL's substance-abuse policy, Carter is believed to have missed at least two drug tests in January and February. The NFL, which declined to comment specifically on Carter's case, counts a missed test the same as a failed test.
Carter's agent, Mitch Frankel, confirmed Tuesday that Carter "missed the tests. There were overriding factors which I would rather not get into, different reasons. It was not his intent to avoid being tested."
In a statement released by Frankel, Carter said, "I cannot begin to comprehend the NFL's decision to suspend me for one year without testing positive for any drug use whatsoever. I understand that not cooperating with the NFL's program for substance abuse is equivalent to testing positive. However, I did cooperate with the program to the best of my ability and demonstrated such cooperation during my appeal.
"Based upon the evidence I presented, the severity of the punishment is extraordinary. I pray that other players in the NFL will never need to fight for their livelihoods under the harsh, unfair circumstances that I had to face."
Frankel, who attended the appeal hearing, agreed with his client. "I just felt the severity of the punishment is highly disproportional and unjustified."
The suspension could mean Carter's career with the Broncos is over. Because of the pending suspension, the Broncos selected cornerback-kick returner Deltha O'Neal of California in the first round of the NFL draft 10 days ago.
The team also signed three free-agent cornerbacks in the offseason Jeremy Lincoln, Jimmy Spencer and Darryl Pounds who will compete with holdover backup Chris Watson.
Last month, Broncos owner Pat Bowlen said the issue of character influenced some recent roster decisions and promised more changes could be in store.
In a statement released Tuesday, the team said, "We had to anticipate being without Dale for the 2000 season and have planned accordingly. It is our hope that in the next year Dale will do what is required of him so he will once again be able to play in the NFL."
The Broncos would face a slary cap hit of at least $5.14 million next season by cutting Carter. If Carter stays with the Broncos during his suspension, his $3.5 million base salary and $1.33 million of his prorated signing bonus would not count against the salary cap.
The Broncos signed Carter, one of the league's best cover corners, to a four-year, $22.8 million free-agent contract last spring. Joining Ray Crockett, Carter was expected to give Denver one of the league's best cornerback tandems, but Carter struggled throughout the 1999 season.
Before coming to Denver, Carter played seven years with the Kansas City Chiefs and was selected to four Pro Bowls.
On Dec. 13, a video camera captured Carter spitting at Pro Bowl offensive tackle Tony Boselli. The NFL fined Carter.
Less than two weeks later, Carter was with Darrius Johnson when the former Denver safety was arrested for at a topless club. The NFL suspended Johnson for four games for violating its substance-abuse policy, and Denver subsequently cut him.
Frankel said the Broncos never told him that Carter was having problems. He said Carter did have a difficult time adjusting to playing with the Broncos, especially since they turned out to have a disappointing season (6-10) despite high expectations.
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